The process of starting a bank varies from state to state, but, in general, here’s
how it goes:
1. A group of individuals decides to start a bank. Their first step is to apply for
a charter from their state banking commission.* The charter sets out the rules for
how they must operate their bank.
2. The banking commission reviews the application to make sure it is complete and
then schedules a hearing.
3. The commission looks at the financial condition and the character of the
applicants.
4. After that, the banking commission will either approve the application or deny it.
5. If approved, the group that applied to start the bank will then have a certain
amount of time to raise the necessary capital, put together a full management team,
and obtain federal deposit insurance.
6. When that’s done, the group will notify the banking commission, which will then
review the list of proposed investors. If the commission has no objection to the
list, if the bank is insured, and if an acceptable management team is in place, the
commission will issue its final approval and the bank may open for business. * The
United States has a dual banking system. People who want to start a bank can choose
to apply for either a state charter or a charter from the federal government.
