A Minority Depository Institution, or MDI, is a federally insured bank or credit union where at least 51 percent of the voting stock is owned by minority individuals, or where the board, membership, and service area are predominantly minority. The designation comes from Section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), and it gives qualifying institutions access to federal technical assistance, capital programs, and merger protections that ordinary banks and credit unions do not receive.1Federal Deposit Insurance Corporation. FDIC Definition of Minority Depository Institution MDIs serve Black American, Hispanic American, Asian American, and Native American communities, and federal regulators are directed by statute to preserve and grow their numbers.
What Counts as an MDI
The FDIC’s Policy Statement identifies four qualifying groups: Black Americans, Asian Americans, Hispanic Americans, and Native Americans.2Federal Deposit Insurance Corporation. Statement of Policy Regarding Minority Depository Institutions The designation applies to commercial banks, savings associations, and credit unions, provided the institution carries federal deposit insurance.
Section 308 provides two paths to the designation, depending on corporate structure.
The Ownership Test
For a privately held bank, one or more minority individuals must own at least 51 percent of the institution. For a publicly traded bank, minority shareholders must hold at least 51 percent of the stock.3Federal Reserve. Preserving Minority Depository Institutions – Section 308 of FIRREA Only ownership by U.S. citizens or permanent legal residents counts toward the 51 percent threshold. Collective ownership by a group of minority individuals, such as a Native American tribe, satisfies the test as long as the threshold is met.2Federal Deposit Insurance Corporation. Statement of Policy Regarding Minority Depository Institutions
The Board and Community Test
Credit unions and mutual savings banks do not issue voting stock, so the statute uses a different test for them. A mutual institution qualifies if the majority of its board of directors, its account holders, and the community it serves are predominantly minority.3Federal Reserve. Preserving Minority Depository Institutions – Section 308 of FIRREA
The FDIC’s Policy Statement extends a version of this test to stock-issuing banks that fall short on ownership: if a majority of the board are minority individuals and the community served is predominantly minority, the FDIC will still treat the bank as an MDI.2Federal Deposit Insurance Corporation. Statement of Policy Regarding Minority Depository Institutions That expansion is a matter of agency policy rather than statutory text.
One boundary worth noting. An MDI designation is separate from Community Development Financial Institution (CDFI) certification, which is a Treasury Department program with its own application. Many MDIs qualify for both, but the two do not travel together automatically.4National Credit Union Administration. Minority Depository Institutions
How a Bank or Credit Union Gets the Designation
The path depends on charter type.
Banks
An FDIC-supervised bank requests MDI status through a written letter signed by an authorized officer and submitted to the appropriate FDIC regional office.5Federal Deposit Insurance Corporation. Minority Depository Institution (MDI) Designations There is no standardized form. The bank supplies whatever documentation demonstrates eligibility: shareholder records showing minority ownership percentages, demographic information on board members, and service-area data describing the community it serves. A request can also be filed in connection with a merger application or a change-in-control notice. If the documentation supports the claim, the FDIC issues a letter acknowledging MDI recognition.
Credit Unions
Federally insured credit unions self-certify. The credit union answers questions about minority representation among its members and board within the NCUA’s Credit Union Online Profile system, and the designation takes effect on certification.6Federal Register. Minority Depository Institution Preservation Program If the NCUA later questions a self-certification, the credit union has 60 days from notification to provide supporting documentation.
What the Designation Unlocks
The label is not ornamental. It carries specific benefits.
Technical Assistance
The FDIC runs a Technical Assistance Program for MDIs covering risk management, regulatory compliance, and board governance, and institutions can request tailored return visits through their Regional MDI Coordinator.7Federal Deposit Insurance Corporation. FDIC Technical Assistance Resources Available resources include on-demand video training, a virtual Directors’ College, and rulemaking explainer sessions. The NCUA offers comparable online educational resources tailored to MDI credit unions.4National Credit Union Administration. Minority Depository Institutions
Emergency Capital Investment Program
The Treasury Department’s Emergency Capital Investment Program (ECIP) was designed for CDFIs and MDIs and provided over $8.57 billion in capital investments to 175 depository institutions.8U.S. Department of the Treasury. Emergency Capital Investment Program Participating institutions can reduce the dividend or interest rate they pay on Treasury’s investment by expanding lending in low-income, rural, and minority communities.
CRA Credit for Partner Banks
Under the final Community Reinvestment Act rule, larger banks receive full community development credit for capital investments, loan participations, and other cooperative ventures with MDIs.9Federal Register. Community Reinvestment Act The rule also includes an impact and responsiveness factor that specifically considers whether a bank’s community development activities support MDIs. Certificates of deposit with terms shorter than one year are excluded from that factor. The practical effect is that big-bank deposits, investments, and loan participations flow toward MDIs partly because those activities count favorably at CRA examination time.
Grants and Loans for Credit Unions
MDI-designated credit unions that also hold a low-income designation can access financial assistance through the NCUA’s Community Development Revolving Loan Fund, which provides grants and loans, including mentoring grants.4National Credit Union Administration. Minority Depository Institutions MDI status alone does not unlock these funds; the dual designation is what matters. The NCUA also assists groups seeking to charter new MDI credit unions.
What Federal Regulators Must Do
Section 308 imposes five specific mandates on the federal banking agencies with respect to MDIs:
- Preserve the current number of MDIs.
- Protect the minority character of MDIs involved in mergers or acquisitions.
- Provide technical assistance to help troubled MDIs stay solvent.
- Promote the creation of new MDIs.
- Offer training and educational programs to strengthen MDI operations.
Each agency submits an annual report to Congress on what it has done to advance these goals.3Federal Reserve. Preserving Minority Depository Institutions – Section 308 of FIRREA
The merger protection is a concrete rule, not just a statement of preference. When an MDI fails or seeks a buyer, regulators are directed to work through a statutory hierarchy: first look for another MDI of the same type in the same city, then in the same state, then nationwide, before entertaining bids from non-MDI acquirers. This is one of the few places in banking law where the government explicitly favors a particular class of acquirer.
Keeping or Losing the Designation
The FDIC does not require a periodic recertification filing. An institution must maintain current documentation supporting eligibility, and examiners review it during routine onsite examinations.10Federal Deposit Insurance Corporation. Minority Depository Institutions Designation Process Shareholder records, board demographic information, and service-area data should be kept current and accessible.
For credit unions, the NCUA requires a reassessment whenever the board of directors changes or the field of membership shifts significantly.11National Credit Union Administration. Minority Depository Institution Preservation Program (IRPS 24-1) If the credit union no longer meets the definition, it updates its designation in the NCUA Credit Union Profile. A credit union can also voluntarily withdraw its MDI status at any time.
Losing the designation does not trigger fines or penalties. What it costs the institution is access: technical assistance programs, ECIP eligibility, CRA-driven partnership opportunities, and, for credit unions with the dual low-income designation, the grant and loan funding available through the Community Development Revolving Loan Fund.11National Credit Union Administration. Minority Depository Institution Preservation Program (IRPS 24-1) For a bank or credit union built around serving a minority community, that lost infrastructure matters even without a formal penalty attached.