APRA ADI Licensing Framework: Legal Criteria, 12-Month Clock, No RADI

ByRegReportingDesk
RegReportingDesk card: APRA, Australian Prudential Regulation Authority, Australia

The APRA ADI licensing framework for domestic banks, credit unions and building societies is now final. On 10 November 2026 the Australian Prudential Regulation Authority (APRA) published the Banking (authorisation criteria) determination No. 1 of 2026, a legislative instrument made under subsection 9(2A) of the Banking Act 1959 and dated 5 November 2026, with new Licensing Guidelines and a letter answering the six submissions to its 2026 consultation.

The determination replaces guidance-based licensing expectations with legally effective criteria. An applicant now has a fixed 12-month window to demonstrate every criterion, the Restricted ADI (RADI) pathway introduced in 2018 is discontinued, and APRA will publish whether it granted or refused each licence. APRA’s media release says the framework takes effect immediately.

For banks already licensed, ongoing capital and liquidity requirements stay in APRA’s prudential and supervisory frameworks; the licensing criteria do not set them.

Related reading: APRA Licence Conditions: The Section 9AA Power Behind the Bendigo Action

Key dates and clocks in the final framework

Milestone Timing Where it is set
Determination signed 5 November 2026, by the Deputy Chair as APRA’s delegate Determination
Publication 10 November 2026; APRA says the framework takes effect immediately Media release and letter to industry
Legal commencement The day after registration on the Federal Register of Legislation Determination
Applications lodged before commencement 12 months from the determination’s commencement Determination, paragraph 3(a)
Applications lodged after commencement 12 months from lodging the application and paying the application fee Determination, paragraph 3(b)
Tranche 1 documents With the formal application Licensing Guidelines
Tranche 2 documents Within three months of the formal application Licensing Guidelines
Tranche 3 documents Within six months, only with APRA’s prior approval Licensing Guidelines
Licensing decision APRA aims to decide within 90 days of finding the application substantially complete Letter and APRA’s process page
Reconsideration of reviewable refusals (subject to section 9D(4)) Request within 21 days after the decision first comes to the applicant’s notice, or a longer period allowed by APRA; APRA then has 21 days from receiving the request, with silence deemed confirmation Banking Act, section 51B(1) and (4)

The two headline clocks sit in different documents. The 12-month period binds the applicant through paragraph 3 of the determination, and only APRA can extend it, in writing and in exceptional circumstances (paragraph 4). The 90-day figure is APRA’s own decision target, set out in the letter and the process page; the determination contains no equivalent obligation on APRA.

What the APRA ADI licensing framework now puts in law

Paragraph 2 of the determination requires a body corporate applying under subsection 9(2) of the Banking Act as a locally incorporated ADI to demonstrate five outcomes, each with listed minimums:

  • Supervisability: open dealing with APRA, complete and accurate information within specified timeframes, reasonable assurance that granting the authority would not result in a breach of the Financial Sector (Shareholdings) Act 1998 by any person, and a group structure that does not hinder APRA.
  • Sufficient resources: the capital and liquidity tests below, readiness to generate revenue through at least one financial product and to accept deposits, and IT systems tested and independently validated.
  • Skills and experience: fit and proper responsible persons, a Board of at least five directors with a majority independent and a majority ordinarily resident in Australia, a Board with the collective skills and experience to oversee banking business operations, and Accountable Persons under the Financial Accountability Regime Act 2023 with the skills and experience to deliver the business plan and clearly defined, documented accountabilities.
  • Risk management: a framework proportionate to the business model, and controls for key operational risks, including risks related to critical operations and the use of material service providers.
  • Responding to stress: recovery options, at least one credible orderly and solvent exit option, and readiness for activation of the Financial Claims Scheme (FCS).

The Licensing Guidelines state that they do not form part of the law or create enforceable requirements. Their proportionality boxes scale the evidence APRA expects, and Box A is explicit that smaller, less complex applicants still have to demonstrate all of the minimum criteria before authorisation.

Capital and liquidity: two dollar floors with different jobs

Test Criterion Common Equity Tier 1 floor
Held at authorisation 2(b)(i) Greater of $15 million or forecast operational expenditure for the following nine months
Credible plans for at least two years after authorisation 2(b)(ii) Greater of $10 million, forecast operational expenditure for the following six months (recalculated quarterly), or an APRA-determined percentage of risk-weighted assets under APS 110, including under stress scenarios

Box B of the Guidelines explains the split. The initial amount ceases to apply once the licence is granted. From then on, the ADI’s Prudential Capital Requirement and buffers come from APRA’s prudential and supervisory frameworks, where APRA may use supervisory judgement by reference to minimum dollar amounts, forecast operating expenditure and/or risk-weighted assets. A risk-weighted figure, the Guidelines say, will likely sit above the prudential minimums.

The $10 million figure is easy to misread as the post-licensing requirement. Box B describes the two-year plans as a test of whether capital holds up under a range of possible prudential settings; the actual requirement is discussed during the assessment and set under the prudential framework.

APRA’s process page adds a capital declaration, submitted after APRA’s final meeting with the applicant’s Board, which APRA typically schedules towards the end of the licensing process: latest CET1 position, monthly burn rate until six months after licensing, how long initial capital is expected to stay above minimum requirements without further raises, and the amount and timing of any raises around licensing. The appointed external auditor’s written verification follows once APRA advises that the application is substantially complete.

On liquidity, criteria 2(b)(iii) and (iv) require liquid assets meeting APS 210 minimums and credible three-year plans, including under stress. Under APS 210, APRA determines whether a locally incorporated ADI is an LCR ADI or a Minimum Liquidity Holdings (MLH) ADI. An MLH ADI must maintain specified liquid assets of at least 9 per cent of its liabilities; for this calculation, liabilities are total on-balance sheet liabilities and irrevocable commitments, except where APRA approves an exclusion for a prudential purpose. APRA may require a higher minimum where it has concerns about the ADI’s liquidity risk profile or liquidity risk management.

Paragraph 38 of the Guidelines adds that APRA will likely determine a new entrant to be an MLH ADI and typically sets a higher tailored requirement after authorisation. For how MLH liquid assets are counted once licensed, see APS 210 settlement service provider deposits for MLH ADIs.

One licensing pathway after the Restricted ADI route

APRA’s RADI framework of 4 May 2018 let new entrants conduct a limited range of business activities for two years while building capabilities and resources. Its July 2025 discussion paper recorded limited take-up, with the last RADI application received over four years earlier, and an average ADI licensing assessment time of 20 months since 2018, some exceeding three years.

The final framework keeps one pathway. APRA’s letter describes RADI as its earlier staged licensing pathway, and the criteria require operational readiness for at least one revenue-generating product and to accept deposits. Deposits cannot be taken before authorisation, so paragraph 44 of the Guidelines says applicants may test with their own funds, for example that interest calculates correctly. After licensing, APRA’s letter says an ADI may expand its activities over time, subject to continuing compliance and any conditions on its authority.

The narrowing covers product scope only: the letter says applicants need not be ready for products outside their launch business model, while every criterion in paragraph 2 still has to be met before authorisation. For applications already lodged, APRA says it is working with applicants so they are not disadvantaged by the changes. The letter sets out no separate arrangement for any entity operating under a restricted licence.

Reporting readiness is assessed before the licence

Criterion 2(a)(ii) turns information quality into a licensing test. Paragraph 18 of the Guidelines says incomplete or inaccurate submissions that need multiple follow-up requests mean an applicant is not capable of being supervised. Under paragraph 22, an applicant that finds an error in a submission is expected to notify APRA and fix it as soon as possible.

The same chapter expects readiness to generate and submit accurate reporting to APRA within given timeframes, with authentications to APRA’s reporting systems set up. In the document checklists, item 4.39, a confirmation of ability to complete required regulatory returns, is a second-tranche document, as are the FCS operational plan and the FCS payment file test, whose specifications APRA provides on request.

Paragraph 18 of the Guidelines ties pack quality to criterion 2(a): failure to provide complete and accurate information within specified timeframes increases the likelihood that the applicant will not meet the Criteria within the 12-month assessment, and that the application is refused. The FAR overview and accountable-person responsibilities are second tranche too, which our article on APRA and ASIC FAR rule changes puts in context.

Published outcomes, unpublished reasons

APRA will publish every decision to grant or refuse an ADI licence. It will not publish the reasons for a refusal, and it will not publish applications withdrawn before a decision. A refusal of an ordinary section 9 application is subject to reconsideration under Part VI of the Banking Act and, where applicable, subsequent Administrative Review Tribunal review. However, section 9D(4) excludes refusals of applications for limited-time authorities under section 9D(1) from Part VI.

Withdrawal before a decision is the only route in the letter that keeps an application out of the published record.

Where licensed ADIs, branches and payment providers sit

The determination governs applications: paragraph 1 applies it to a body corporate applying for an authority under subsection 9(2). An ADI that already holds an authority is not asked to re-demonstrate the criteria.

Two groups sit outside the new criteria by definition, because the determination’s locally incorporated ADI excludes a foreign ADI and an ADI whose banking business consists only of providing a purchased payment facility. Foreign ADI branches have their own licensing criteria, and APRA’s letter says it plans to revise that approach separately. Purchased payment facility applicants stay on the existing framework while the Government’s proposed reforms giving APRA responsibility for large stored value facility providers are pending. For a comparison with the EU route to a banking licence, our ECB banking authorisation explainer covers the SSM procedure.

Frequently Asked Questions

Our application is lodged but APRA’s fee invoice has not arrived yet. Has the 12-month period started?

For applications lodged after commencement, paragraph 3(b) runs the period from lodging the application and paying the fee, and APRA’s letter has it beginning after both steps. APRA’s process page describes invoicing once the formal application is received, with the fee payable before formal assessment begins and non-refundable; confirm the arrangements for your application directly with APRA.

Can a delay in an ASIC or Financial Sector (Shareholdings) Act approval stop the clock?

The determination’s note puts other approvals on the applicant and warns that delays can mean failing the timeframe criterion. The Guidelines’ examples of exceptional circumstances include court orders, government intervention, unexpected delays by foreign regulators and significant operational disruptions; delays largely attributable to the applicant are unlikely to qualify. Domestic approval delays are not listed, which leaves the call with APRA.

Can the initial capital be raised through several share classes or preference shares?

The criterion counts Common Equity Tier 1 Capital as defined in APS 111. The Guidelines say this will generally mean one class of fully subordinated share with full voting rights and equal rights to dividends and in liquidation. The first tranche includes a self-assessment against APS 110 and APS 111 and the capital instruments’ issuance documents.

Key Takeaways

  • Before lodging, the Guidelines expect at least five directors already appointed, with a majority independent and a majority ordinarily resident in Australia.
  • Model the two-year capital plan against all three 2(b)(ii) floors under stress, and budget for a post-licensing requirement above prudential minimums.
  • The first tranche carries the business plan with five-year projections, the ICAAP, the liquidity documents, the Recovery and Exit Plan and self-assessments against standards such as CPS 220, CPS 230, CPS 234 and CPS 190.

Sources and References

Next step for pending and prospective ADI applicants

For an application lodged before the determination commenced, the date to fix is its registration on the Federal Register of Legislation on 9 November 2026, because the 12 months under paragraph 3(a) run from the following day. A prospective applicant starts with pre-application: APRA’s letter asks it to prepare a high-level summary of business strategy, funding sources, ownership and structure, corporate governance and the project plan before contacting Licensing@apra.gov.au.

Disclaimer: The information on RegReportingDesk.com is for educational and informational purposes only. It does not constitute legal, regulatory, tax, or compliance advice. Always consult your compliance officer, legal counsel, or the relevant supervisory authority for guidance specific to your institution.

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