Banks: Draft Directive on Internal Liquidity Adequacy Assessment

Brought to you by SA Legal Academy: The Prudential Authority has released a draft directive outlining mandatory requirements for the Internal Liquidity Adequacy Assessment Process (ILAAP) for banks.

In terms of the Banks Act, No. 94 of 1990, the Prudential Authority (PA) has called for comments on a draft directive prescribing ILAAP requirements. The proposed regulations are guided by the Basel Committee on Banking Supervision principles for sound liquidity risk management and supervision.

The directive aims to formalise the assessment of liquidity risks within financial institutions. Under the proposed framework, banks will be required to:

• Submit comprehensive ILAAP documentation to the PA on an annual basis;
• Include a signed liquidity adequacy statement as part of the submission; and
• Ensure that the ILAAP serves as a critical input into the PA’s supervisory review and evaluation process.

The PA intends for these requirements to ensure that banks maintain sufficient liquidity to meet their obligations under both normal and stressed conditions. Stakeholders and interested parties have until 30 April 2026 to submit their comments on the draft directive.

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

• For yourself: Professional advisors must update their compliance checklists to include the specific documentation and board-level certification requirements mandated by the draft ILAAP directive.
• For your business: Banks must prepare for the implementation of annual ILAAP reporting cycles, including the internal governance required to produce a signed liquidity adequacy statement.
• For your clients: Banking clients must ensure their liquidity risk management frameworks are robust enough to withstand the Prudential Authority’s enhanced supervisory review and evaluation process.

Originally published at https://legalacademy.co.za/news/read/banks-input-sought-on-internal-liquidity-adequacy-assessment-directive