On 30 July 2025, the Australian Prudential Regulation Authority (APRA) issued a discussion paper – Improving the licensing framework for authorised deposit-taking institutions.

In the discussion paper APRA outlines proposals that are intended to improve the current licensing process for authorised deposit-taking institutions (ADIs) introduced in 2018. The new regime strives to be clearer, quicker and more supportive of new entrants to the banking sector.  These proposals also seek to reduce the time and cost associated with obtaining a banking license.

APRA’s proposals include:

  • Clearer licensing expectations. APRA proposes introducing new formal licensing criteria.  The new criteria would codify APRA’s existing licensing expectations and more clearly set out the requirements that applicants must meet to be granted a banking licence.  The criteria comprises both broad outcomes and prescriptive requirements. It would apply to an applicant seeking to establish a locally-incorporated ADI. It will also apply to foreign banks seeking to establish a branch in Australia, with some variations. APRA will provide further guidance on how applicants can demonstrate compliance with the criteria.
  • Quicker and more transparent licensing decisions. APRA proposes introducing a 12-month timeframe for applicants to demonstrate that they meet the new licensing criteria. Once the 12 months have concluded, APRA would target a licensing decision within three months. The timeframe would not preclude APRA from making a licensing decision sooner than 12 months, where an applicant has met the criteria. To enhance transparency, APRA also proposes making all licensing decisions public, including instances where a licence application is refused. APRA would not publish instances where an applicant voluntarily withdraws its licence application, prior to a formal decision being made.
  • Discontinuing the RDI Pathway. The “Restricted ADI” or RADI is a pathway designed to allow new entrants to the market to conduct limited banking activity while developing the more fulsome capital and resources needed to become an ADI, though the last application was four years ago.  Only five entities granted a RADI have been successful in the transition to an ADI.  APRA is seeking stakeholder feedback on the future of the regime, though this may be the end of the RADI pathway.

Next steps

The deadline for comments on the discussion paper is 31 October 2025.

APRA expects to issue the final criteria and guidance in Q4 2026.