Banks Act: Draft Directive on Large Exposures Measurement and Control

Posted 22 October 2025 Written by Acts Online
Category Financial Sector

Brought to you by SA Legal Academy: The Prudential Authority (PA) has published a draft directive under the Banks Act, No. 94 of 1990, to establish revised conditions for the measurement and control of large exposures.

In terms of the Banks Act, No. 94 of 1990, the PA is seeking input on a regulatory framework designed to mitigate the risk of loss resulting from the failure of an individual counterparty or a group of connected counterparties. The proposed directive outlines specific criteria for the appointment and functioning of a large exposures approval committee, ensuring robust internal governance for significant credit risks.

Once finalised, the directive will replace the following regulatory instruments:

  • Directive 5/2008, issued in May 2008; and
  • Directive 4/2022, issued in April 2022.

The draft directive addresses the measurement of exposure values across various financial instruments and the conditions under which credit risk mitigation may be recognised. It further clarifies the reporting obligations for banks to ensure transparency in their exposure profiles. This follows a previous draft released in May 2025, though the current version serves as the primary document for the current consultation phase.

Interested parties and stakeholders are invited to submit their comments on the draft directive to the Prudential Authority by no later than 29 October 2025.

Click here to view the official notice and related documentation.

What this means for you, your business, or your clients

  • For yourself: Compliance and risk professionals must familiarise themselves with the revised measurement methodologies to ensure internal audit and reporting processes align with the proposed standards.
  • For your business: Registered banks must evaluate the composition of their large exposures approval committees and prepare to update automated risk-monitoring systems to comply with the new exposure limits and calculation rules.
  • For your clients: Large corporate borrowers and groups of connected counterparties may experience changes in credit availability or more rigorous disclosure requirements as banks tighten exposure controls in line with the new directive.

Originally published at https://legalacademy.co.za/news/read/banks-large-exposures-measurement-control-directive-out-for-comment

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