Banks Act: Draft Directive on Interest Rate Risk Standards

Posted 03 November 2025 Written by Acts Online
Category Financial Sector

Brought to you by SA Legal Academy: The Prudential Authority has issued a draft directive for public comment regarding the transition of interest rate risk regulations into formal prudential standards.

In terms of the Banks Act, No. 94 of 1990, the Prudential Authority (PA) has invited stakeholders to submit comments on a draft directive concerning interest rate risk in the banking book (IRRBB). This follows the PA’s previously communicated intention in June 2025 to convert existing amended regulations into enforceable prudential standards.

The proposed directive seeks to replace Regulation 30 of the Regulations Relating to Banks. Once finalised, the new standard will incorporate the Basel Committee on Banking Supervision (BCBS) requirements, specifically focusing on the implementation of recalibrated interest rate shocks. This transition aims to modernise the regulatory framework governing how banks manage and report interest rate risks that do not arise from their trading activities.

The PA has established the following timeline for the implementation of these changes:

  • 15 December 2025: Deadline for the submission of public comments on the draft directive.
  • 1 July 2026: Proposed effective date for the new prudential standard and the replacement of Regulation 30.

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

  • For yourself: No direct individual obligations; impact is channelled through institutional compliance frameworks for banking professionals and risk officers.
  • For your business: Banks and financial institutions must review internal risk management frameworks to ensure alignment with the BCBS recalibrated shocks before the 1 July 2026 deadline.
  • For your clients: Corporate and retail clients may experience shifts in bank risk appetite or product pricing as institutions adjust their banking book strategies to meet the new prudential standards.

Originally published at https://legalacademy.co.za/news/read/banks-interest-rate-risk-standard-proposals-out-for-comment

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