The Australian Prudential Regulation Authority (APRA) has released draft Licensing Criteria and Guidelines for locally incorporated authorised deposit-taking institutions (ADIs), proposing a more transparent, timebound and effective pathway for applicants seeking authority to conduct banking business in Australia.
Where things stand
On 13 May 2026, APRA released a consultation package seeking feedback on its revised ADI licensing framework. APRA is proceeding with three core reforms:
- Replacing guidance-based licensing expectations with legally effective criteria.
- Discontinuing the Restricted ADI pathway.
- Publishing all licensing decisions, including refusals.
The reforms are intended to improve clarity, efficiency and transparency while preserving prudential standards necessary for undertaking banking business and protecting depositors. The package is intended to implement APRA’s 2025–2026 Corporate Plan priority and Action 6 of the Council of Financial Regulators’ review into small and medium-sized banks, which focuses on simplifying bank licensing.
New criteria and obligations
The consultation seeks feedback on the draft licensing framework, comprising the ADI Licensing Criteria and the ADI Licensing Guidelines.
ADI Licensing Criteria
The ADI Licensing Criteria will codify APRA’s licensing expectations into a single legislative instrument under the Banking Act 1959 (Cth) and is proposed to apply to bodies corporate seeking authority to carry on banking business in Australia as locally incorporated ADIs. APRA plans to revise its approach to foreign ADI branches after finalising the framework for locally incorporated ADIs.
The key licensing criteria consist of the following:
- APRA supervision: applicants will need to demonstrate that they are structured and operate in a way that can be effectively supervised, including by dealing with APRA in an open, constructive and cooperative way, providing complete and accurate information within specified timeframes, satisfying APRA on Financial Sector (Shareholdings) Act 1998 (Cth) issues and maintaining a corporate group structure that does not impede APRA’s powers and functions.
- Financial resources: applicants must have financial resources to prudently conduct a banking business, including a Common Equity Tier 1 Capital amount equal to the greater of $15 million or nine months of forecast operational expenditure at licensing, together with credible post-authorisation capital plans. Applicants must also have adequate liquidity resources and a three-year liquidity plan.
- Non-financial resources and operational readiness: applicants must have at least one revenue-generating financial product available to the public, be ready to accept deposits, and have fit-for-purpose IT systems that have been independently validated. The draft Guidelines make clear that APRA expects applicants to have end-to-end systems in place to support deposit-taking before licensing.
- Organisational competence: applicants must have fit and proper responsible persons, clear accountabilities, a board of at least five directors with a majority independent and ordinarily resident in Australia, and Accountable Persons under the Financial Accountability Regime who can deliver the business plan.
- Risk and stress planning: applicants must have a proportionate risk management framework, controls for key operational risks including critical operations and material service providers, and credible plans for recovery, solvent exit and Financial Claims Scheme activation. The draft Guidelines state that recovery and exit plans should not assume public sector support and should be integrated with the applicant’s risk management, capital management, liquidity management and business planning frameworks.
ADI Licensing Guidelines
The ADI Licensing Guidelines provide additional information and guidance on how APRA expects applicants to demonstrate that they meet the licensing criteria. The guidelines are mapped against the ADI Licensing Criteria and cover ability to be supervised, financial and non-financial resources, skills and experience, the ADI’s risk management framework and the ADI’s ability and plan to respond to stress events. While the guidelines discuss legal requirements, the guidelines do not create enforceable requirements.
Timing
Applicants will have 12 months to demonstrate that they meet the ADI Licensing Criteria. For applications submitted before the new instrument commences, the 12 month period will run from commencement. For later applications, the period will run from the date of lodgement with APRA. APRA may extend the timeframe in exceptional circumstances by informing the applicant in writing.
The draft process contemplates pre-application engagement, formal application, assessment, a ‘substantially complete’ application stage and a final licensing decision. APRA will aim to make a licensing decision within 90 days of determining an application is substantially complete.
The draft guidelines also introduce a more structured documentation process. Primary documents are expected with the application, secondary documents may be submitted within the first three months, and delayed documents may be submitted within the first six months only with APRA approval.
What’s next
APRA is seeking feedback on whether the draft criteria are sufficiently clear, whether additional guidance would assist applicants, what further information should be included on the licensing process and required documentation, and whether APRA should publish only refusal decisions or also reasons for refusals.
Submissions are due by 31 July 2026, and APRA intends to publish the final ADI Licensing Criteria and Guidelines in late 2026. Once finalised, the new framework will replace APRA’s existing ADI licensing guidelines.
Prospective applicants should use the consultation period to test whether their capital planning, board composition, technology readiness, risk management framework and documentation programme can support a complete application within the proposed 12-month assessment period.