On May 2, the New York Senate introduced a bill that, if passed, would establish a new article under the state’s banking law to provide for the chartering and regulating of internet lending services corporations (on-line lenders). Among other things, the “New York limited state charter for internet lending services,” S8340, would (i) authorize the New York Department of Financial Services (NYDFS) to issue limited state charters to on-line lenders who “engage in the business of making loans over an internet or electronic platform”; (ii) allow chartered on-line lenders to approve or deny consumer loan applications submitted through NYDFS-approved electronic means; (iii) limit the principal amount of personal loans to $25,000 and $50,000 for business and commercial loans, as well as require the adherence to legally authorized interest rates; (iv) require that chartered on-line lenders be able to demonstrate fiscal solvency with “a minimum capital requirement of not less than $250,000”—an amount five times higher than what is required of brick and mortar-based licensed lenders; and (v) grant NYDFS the authority to regulate chartered on-line lenders.

S8340 further notes that, at present, the state’s banking law does not provide a regulatory environment to oversee the operations of on-line lenders. The bill currently sits with the Senate’s Banks Committee.