Community Reinvestment Act (CRA) Law and Legal Definition

Community Reinvestment Act (CRA) is a federal law which requires federally regulated lenders to describe the geographical market area they serve. The Act passed in 1977 is designed to encourage commercial banks and savings association to meet borrowers’ needs in all segments. It reduces discriminatory credit practices against low income borrowers. Federal financial supervisory agencies encourage regulated financial institutions to meet the credit needs of the local communities. To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions