Mutual banks regulatory updates
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Individual Reform: Mutual banks regulatory updates 2026 - 2027

New reporting requirements and supervision.

No data available for the deliverable: New reporting requirements and supervision.

No data available for the deliverable: New reporting requirements and supervision.

No data available for the deliverable: New reporting requirements and supervision.

No data available for the deliverable: New reporting requirements and supervision.

No data available for the deliverable: New reporting requirements and supervision.

Summary

The reform introduces new prudential standards, CODI contributions and updated reporting, with ongoing review of the Mutual Banks Act. This enhances monitoring and guidance for mutual banks.

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Is it working?

The sector is more resilient, but continues focus on governance and solvency. The Mutual Banks Act review will ensure full harmonisation with Basel III.

Actions

Mutual banks are now covered by CODI and subject to robust prudential standards, though further reforms are anticipated.

Are there plans?

Directive D1/2024 and Prudential Standard CODI 1 set out new requirements, with ongoing review of the act for further alignment.

Is it on the agenda?

The SARB and Prudential Authority have prioritised this, issuing new directives and standards in 2024.

Goals

To align mutual banks with broader banking sector reforms, ensuring prudential soundness and depositor protection.

References

Departments / Govt Institutions

Financial Sector Conduct Authority (FSCA) Parliament South African Reserve Bank (SARB)

Summary

The reform introduces new prudential standards, CODI contributions and updated reporting, with ongoing review of the Mutual Banks Act. This enhances monitoring and guidance for mutual banks. SARB/PA enhanced mutual banks oversight, launched new reporting rules and sector supervision upgrades following sector feedback in 2024/25. Mutual banks conduct/reporting reforms are live and a SARB sector review is scheduled for 2026.

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Is it working?

The sector is more resilient, but governance and solvency are focus areas. The Mutual Banks Act review will ensure full harmonisation with Basel III. Ongoing refinement is planned for 2026.

Actions

Mutual banks are now covered by CODI and subject to robust prudential standards, though further reforms are anticipated. Sector compliance has significantly improved with FSCA/SARB noting this.

Are there plans?

Directive D1/2024 and Prudential Standard CODI 1 set out new requirements, with ongoing review of the act for further alignment. There are plans for reporting and supervision audits as well as proactive sector monitoring.

Is it on the agenda?

The SARB and Prudential Authority issued new directives and standards in 2024. This is a Cabinet/Parliament agenda as well as continuing as a priority for the FSCA and SARB/PA.

Goals

To align mutual banks with broader banking sector reforms, ensuring prudential soundness and depositor protection. The main objective is to improve reporting and supervision for/of mutual banks.

References

Departments / Govt Institutions

Financial Sector Conduct Authority (FSCA) Parliament South African Reserve Bank (SARB)

Summary

The Prudential Authority (PA) is in the process of revising the regulatory and supervisory framework for mutual banks, moving from a primarily regulation‑driven Mutual Banks Act regime to one where prudential standards issued under the FSR Act provide the core requirements. The PA’s Regulatory Strategy 2025-2030 commits to a “revised and implemented mutual banks regulatory and supervisory framework” and to developing a tiered, proportional approach to the deposit‑taking sector. Recent PA directives to mutual banks already reflect this shift, including updated capital and risk‑weight treatment for CODI fund‑liquidity contributions and the use of prudential standards rather than only regulations.


Canvas not supported.

Is it working?

The reform trajectory is clear but the full, consolidated mutual banks framework is still in transition: key building blocks such as CODI‑related treatment and the move to prudential‑standard‑based requirements are in place, yet the wider proportionality and tiered‑sector design – including any legislative amendments – is scheduled to complete during 2026. For now, mutual banks benefit from clearer treatment of CODI exposures and the prospect of a more proportionate framework, but there is residual uncertainty about the final shape of licensing categories and prudential calibration until the deposit‑taking review concludes.

Actions

Recent concrete actions include: (i) Directive D1/2024 to mutual banks, which sets the prudential treatment of mutual‑bank contributions to the CODI fund‑liquidity facility, explicitly referencing the Prudential Standard CODI 1_Fund liquidity and confirming that, because the facility is guaranteed by SARB, exposures carry a 0% risk weight and must be reported in specified DI100 and DI500 line items; and (ii) Directive D1/2025, which clarifies that, under section 1A(5) of the Mutual Banks Act read with section 105 of the FSR Act, the PA may in future determine DI returns and other matters via prudential standards instead of traditional regulations. The PA also signals, in its Regulatory Strategy and prudential‑regulation reporting, ongoing work to revise and implement the mutual‑banks framework as part of the tiered‑deposit‑taker project.

Are there plans?

Planned steps include: (i) completing the proportionality review of the deposit‑taking framework, which may result in amendments to the Mutual Banks Act 124 of 1993 and/or new prudential standards tailored to mutual banks; (ii) further embedding CODI‑related prudential treatment (for example, risk‑weighting of fund‑liquidity contributions and reporting via DI returns) through standards and directives; and (iii) clarifying the future positioning of mutual banks relative to co‑operative banks and full commercial banks, possibly reducing segmentation while maintaining proportional requirements. External legal commentary notes that new prudential standards are being developed to reflect proportionality and may trigger legislative amendments.

Is it on the agenda?

The 2026 Budget Review notes that National Treasury and the PA are reviewing the regulatory framework for deposit‑taking institutions to enable more proportionality, simplifying oversight for smaller and less complex institutions and allowing more flexible calibration of prudential requirements, with completion targeted for 2026. The PA’s Regulatory Strategy explicitly highlights a revised and implemented mutual banks regulatory and supervisory framework and the development of a policy approach to a tiered deposit‑taking sector as key outcomes.

Goals

To modernise and re‑anchor the prudential and supervisory framework for mutual banks so that requirements are clearly aligned to the FSR Act Twin Peaks architecture, support proportional regulation of smaller deposit‑takers and integrate new tools such as the Corporation for Deposit Insurance (CODI) fund‑liquidity arrangements.

References

Departments / Govt Institutions

Financial Sector Conduct Authority (FSCA) Parliament South African Reserve Bank (SARB)

Summary

The Prudential Authority (PA) is in the process of revising the regulatory and supervisory framework for mutual banks, moving from a primarily regulation‑driven Mutual Banks Act regime to one where prudential standards issued under the FSR Act provide the core requirements. The PA’s Regulatory Strategy 2025-2030 commits to a “revised and implemented mutual banks regulatory and supervisory framework” and to developing a tiered, proportional approach to the deposit‑taking sector. Recent PA directives to mutual banks already reflect this shift, including updated capital and risk‑weight treatment for CODI fund‑liquidity contributions and the use of prudential standards rather than only regulations.


Canvas not supported.

Is it working?

The reform trajectory is clear but the full, consolidated mutual banks framework is still in transition: key building blocks such as CODI‑related treatment and the move to prudential‑standard‑based requirements are in place, yet the wider proportionality and tiered‑sector design – including any legislative amendments – is scheduled to complete during 2026. For now, mutual banks benefit from clearer treatment of CODI exposures and the prospect of a more proportionate framework, but there is residual uncertainty about the final shape of licensing categories and prudential calibration until the deposit‑taking review concludes.

Actions

Recent concrete actions include: (i) Directive D1/2024 to mutual banks, which sets the prudential treatment of mutual‑bank contributions to the CODI fund‑liquidity facility, explicitly referencing the Prudential Standard CODI 1_Fund liquidity and confirming that, because the facility is guaranteed by SARB, exposures carry a 0% risk weight and must be reported in specified DI100 and DI500 line items; and (ii) Directive D1/2025, which clarifies that, under section 1A(5) of the Mutual Banks Act read with section 105 of the FSR Act, the PA may in future determine DI returns and other matters via prudential standards instead of traditional regulations. The PA also signals, in its Regulatory Strategy and prudential‑regulation reporting, ongoing work to revise and implement the mutual‑banks framework as part of the tiered‑deposit‑taker project.

Are there plans?

Planned steps include: (i) completing the proportionality review of the deposit‑taking framework, which may result in amendments to the Mutual Banks Act 124 of 1993 and/or new prudential standards tailored to mutual banks; (ii) further embedding CODI‑related prudential treatment (for example, risk‑weighting of fund‑liquidity contributions and reporting via DI returns) through standards and directives; and (iii) clarifying the future positioning of mutual banks relative to co‑operative banks and full commercial banks, possibly reducing segmentation while maintaining proportional requirements. External legal commentary notes that new prudential standards are being developed to reflect proportionality and may trigger legislative amendments.

Is it on the agenda?

The 2026 Budget Review notes that National Treasury and the PA are reviewing the regulatory framework for deposit‑taking institutions to enable more proportionality, simplifying oversight for smaller and less complex institutions and allowing more flexible calibration of prudential requirements, with completion targeted for 2026. The PA’s Regulatory Strategy explicitly highlights a revised and implemented mutual banks regulatory and supervisory framework and the development of a policy approach to a tiered deposit‑taking sector as key outcomes.

Goals

To modernise and re‑anchor the prudential and supervisory framework for mutual banks so that requirements are clearly aligned to the FSR Act Twin Peaks architecture, support proportional regulation of smaller deposit‑takers and integrate new tools such as the Corporation for Deposit Insurance (CODI) fund‑liquidity arrangements.

References

Departments / Govt Institutions

Financial Sector Conduct Authority (FSCA) Parliament South African Reserve Bank (SARB)

Analyst: Tinashe Kambadza
Status: in-progress
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