APRA has finalised a simpler and more transparent licensing framework for locally incorporated Authorised Deposit-taking Institutions (ADIs) that should facilitate faster licensing of qualified applicants.1 The new framework provides greater clarity and certainty for applicants while maintaining strong prudential safeguards that underpin financial safety, system resilience and depositor protection.
This letter sets out APRA’s response to submissions received during consultation, explains the key changes made in finalising the framework and outlines the next steps for implementation. The final framework has been published alongside this letter on APRA’s website.
Overview
Updating the ADI licensing framework is a key deliverable under APRA’s 2026-27 Corporate Plan.2 The new framework is consistent with APRA’s strategic objective of ‘getting the balance right’. While all applicants must demonstrate that they meet the minimum licensing criteria, APRA’s expectations and the extent of evidence required will be proportionate to each applicant’s strategy, business mix, risk profile, size and complexity.
The new framework is intended to make the pathway to a licensing decision clearer, more predictable and more efficient. It establishes transparent minimum criteria, clearer expectations for applicants and defined timeframes for both applicants and APRA. These changes improve the licensing process without lowering the minimum criteria for authorisation.
Finalising the licensing framework also implements Action 6 of the Council of Financial Regulators’ Review into Small and Medium-sized banks, which recommended that APRA make its ADI licensing application process more transparent and efficient.3
APRA’s new licensing framework comprises:
- ADI Licensing Criteria (the Criteria) – legally effective, outcomes-based licensing criteria, set out in a legislative instrument. All applicants must demonstrate they meet the Criteria before APRA may authorise them to carry on banking business. APRA’s expectations and the extent of evidence required will be proportionate to each applicant’s strategy, business mix, risk profile, size and complexity.
- ADI Licensing Guidelines (the Guidelines) – supporting information and guidance on how applicants may demonstrate that they meet the Criteria. While the Guidelines discuss requirements arising under legislation and APRA’s prudential framework, they do not create enforceable requirements.
Under the new framework, applicants will have up to 12 months from lodging a formal application and paying the application fee to demonstrate that they meet the Criteria. Once APRA determines that an application is substantially complete, APRA will aim to make a licensing decision within 90 days. These clearer timeframes provide applicants with greater certainty about the licensing process and increase APRA’s accountability for timely decision-making.
Consultation feedback
The new framework was developed through two rounds of consultation with industry and other stakeholders. In July 2025, APRA published an initial discussion paper proposing changes to the ADI licensing framework.4 The feedback was incorporated into a draft licensing framework, which APRA published for consultation in May 2026.5 APRA has now finalised the new licensing framework, taking into account feedback from both consultations and its experience administering the previous framework since 2018.
APRA received six submissions to the 2026 consultation, with non-confidential submissions published on APRA’s website. Respondents supported the proposed new framework and its objective to make the licensing process more transparent and efficient.
Key themes raised in submissions included:
- Proportionality in practice. Respondents strongly supported clearer licensing criteria but sought more guidance on how APRA will apply proportionality when assessing applications. This included how expectations may differ for smaller, less complex applicants and different business models.
- Post-authorisation requirements. Respondents considered that the framework was clear on APRA’s expectations during the licensing assessment process but sought greater detail on APRA’s requirements in the period immediately following authorisation.
- Staged entry. There was broad support for removing the Restricted ADI (RADI) pathway. However, some respondents recommended APRA provide a staged licensing pathway for smaller, start-up applicants.
- Licensing timeframes. Respondents welcomed the proposed 12-month timeframe for completing a licence application but sought clarity on when the timeline would commence. Some submissions also asked APRA to clarify the exceptional circumstances under which the timeframe may be extended, including where delays are outside the applicant’s control.
- Publishing licensing decisions. Some respondents raised concerns about publishing all licensing decisions, including refusals, given the need to protect commercially sensitive information and manage potential reputational impacts. Respondents also raised concerns about APRA publishing the reasons for refusing an application.
APRA has considered the feedback received through the consultation process in finalising the new licensing framework. Attachment A provides further detail on submission feedback and APRA’s response.
Next steps
The new ADI licensing framework takes effect immediately. APRA is working with applicants who have already lodged a formal application to transition to the new framework to ensure their application is not disadvantaged by the changes.
Prospective applicants are strongly encouraged to familiarise themselves with the new licensing framework, as well as APRA’s prudential framework which sets ongoing prudential requirements for APRA-regulated entities. APRA has also published new information on the ADI licensing process which is available on APRA’s website.6 This information is intended to help businesses determine whether they require an ADI licence and to assist prospective applicants to understand the process from pre-application through to licensing decision.
In keeping with the new guidance, prospective applicants seeking a locally incorporated ADI licence should prepare a high-level summary of their business strategy, funding sources, ownership and structure, corporate governance and project plan before contacting Licensing@apra.gov.au to commence the pre-application process.
Yours sincerely,
Therese McCarthy Hockey
Deputy Chair
Attachment A – Response to submissions
The following table summarises the key feedback received in submissions and APRA's response.
| Issue | Comments received | APRA’s response |
|---|---|---|
| Proportionality in the new licensing framework | Most respondents sought clarity on how APRA will apply proportionality when assessing licensing applications, including practical examples. | All applicants must meet the minimum Criteria. APRA’s expectations on what is required to satisfy each criterion will scale commensurately with each applicant’s strategy, business mix, risk profile, size and complexity. APRA has included some practical examples in the Guidelines. These examples are not exhaustive but aim to improve transparency around how APRA may assess different applicants. |
| Additional guidance and licensing process transparency | Respondents sought additional guidance on the evidence applicants should provide to demonstrate the Criteria, including operational readiness and sufficient technology and other non-financial resources. Some submissions sought clarity on the interaction between APRA’s ADI licensing framework and other regulatory frameworks administered by other regulators. | APRA has expanded the Guidelines to provide additional information on how applicants can demonstrate that they meet the Criteria, including practical examples of proportionality, operational readiness, and technology resources. APRA has also published updated information on its website about steps in the licensing assessment process, which includes information on interactions with other regulators. Applicants remain responsible for obtaining any separate licences or approvals required from other regulators. |
| Post-authorisation capital and liquidity requirements | Respondents sought clarity on how APRA sets capital and liquidity requirements immediately after licensing. | All ADIs must comply with APRA’s prudential framework. APRA considers an ADI’s risk profile, size, complexity and business model when setting capital requirements. For new entrants, APRA may use supervisory judgement to set capital requirements by reference to minimum dollar amounts, forecast operating expenditure and/or risk-weighted assets. This reflects that determining capital requirements solely by reference to risk-weighted assets may not produce a minimum capital requirement commensurate with the risks of a new ADI. APRA similarly determines liquidity requirements for new ADIs under its prudential and supervisory frameworks, having regard to their liquidity risk profile. The Guidelines clarify APRA’s approach in setting capital and liquidity requirements for new entrants. |
| The time-bound licensing assessment process | Respondents sought clarity on when the 12-month licensing assessment process begins and what circumstances APRA will consider ‘exceptional’ for the purpose of extending deadlines. | The 12-month licensing assessment period begins following the lodgement of a formal licensing application and payment of the licensing application fee. This occurs after the pre-application process. APRA has clarified in the Guidelines what may constitute ‘exceptional circumstances’ for the purposes of extending the licensing assessment period. This may include delays that arise outside of an applicant’s control. |
| Staged licensing pathways | Respondents wanted to ensure that removing the RADI pathway would not raise barriers to entry. Some submissions suggested smaller, start-up applicants should be able to commence banking business with limited operations and expand over time rather than needing to demonstrate readiness for a full suite of banking products at licensing. | APRA previously implemented a staged licensing pathway through the RADI pathway. APRA’s experience was that the RADI pathway did not operate as simply or effectively as intended, which led to limited take-up. Applicants that used the RADI pathway reported that transitioning to a full ADI licence was difficult and that a simpler and clearer pathway to authorisation was preferable. The new framework therefore simplifies APRA’s approach by moving from two licensing pathways to a single pathway. APRA will discontinue the RADI pathway. The new framework does not require an applicant to demonstrate readiness to offer a broad range of products or activities that are not part of its proposed business model at launch. An applicant must nevertheless demonstrate that it meets APRA’s minimum criteria, including being operationally ready to offer at least one revenue-generating product. APRA recognises that demonstrating operational readiness may require smaller entrants to commit significant resources before APRA determines the licensing outcome. The new framework provides greater clarity and certainty through transparent licensing criteria, proportionate assessment and more timely decision-making. An ADI may expand its activities over time, subject to continuing compliance with APRA’s prudential framework and any conditions on its authority. |
| Publishing licensing decisions | Respondents noted that APRA should take care when publishing licensing refusals, given the potential for reputational damage and the need to protect commercially sensitive information. | Publishing licensing decisions supports APRA’s objective of improving transparency in the licensing assessment process. It also encourages high-quality applications. APRA will publish decisions to grant or refuse an ADI licence. APRA will not publish information about applications that are withdrawn before a licensing decision is made. To prevent release of commercially sensitive or confidential information, APRA will not publish reasons for refusing an application. |