State banking regulators will conduct a study on overdraft fees in New York and the impact on consumers, especially low-income people, under a law approved Friday by Gov. Kathy Hochul.

"As New Yorkers recover from the economic pains of the pandemic, it is critical that we do everything possible to increase access to affordable banking services," Hochul said. "This legislation will help ensure that every New Yorker has access to low-cost banking services to manage and secure their needs, regardless of where they live."

The new law will require the Department of Financial Services, a banking and insurance regulator, to conduct the study and submit a report on the issue.

The agency's report will review the total amount of overdraft fees paid in the state, the geographical distribution, whether specific communites have high rates of overdraft charges and the percentage of fees that are reduced through negotiations.

Officials will also be assessing how banks disclose the rights of the consumer in fee negotiations.

"Overdraft fees cost New Yorkers millions of dollars per year. Low-income residents are already struggling to make ends meet," said Queens state Sen. James Sanders, who sponsored the measure with Assemblywoman Pat Fahy. "This legislation will help us understand the true impact of overdraft fees so we can find ways to address the problem."

Approval of the law by Hochul dovetails with guidance her administration released this week reminding banks to avoid practices such as charging consumers an overdraft fee even though their account balance showed sufficient funds at the time it was authorized, as well as double fees from overdraft protection transfers.