MUTUAL BANKS: CORPORATION FOR DEPOSIT INSURANCE CONTRIBUTIONS

MUTUAL BANKS: CORPORATION FOR DEPOSIT INSURANCE CONTRIBUTIONS

• 17 April 2024
• Financial Sector
• SA Legal Academy

The Prudential Authority has called for input by 1 May 2024 on a draft directive intended to instruct mutual banks and their auditors on mandatory fund liquidity contributions to the Corporation for Deposit Insurance, which became operational on 1 April 2024. The corporation was established to give bank-in-resolution clients reasonable access to their covered deposits.

According to the draft directive, contributions from mutual banks should take the form of interest bearing loans to the corporation – guaranteed by the South African Reserve Bank. Reference is also made to an 8 March 2024 fund liquidity prudential standard applicable to mutual banks.

Against that backdrop, the draft directive proposes a 0% risk weighting, bearing in mind that:

• Mutual Banks Act Regulation 23 prescribes the risk weighting schemes applicable to mutual banks when calculating credit risk-related minimum regulatory capital and reserve fund requirements, and that
• regulations under the Mutual Banks Act, 1993, also provide for the treatment of guaranteed exposures.

Please click the links below for more information:

• draft directive
• fund liquidity prudential standard

Published by SA Legal Academy Policy Watch

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