Is it working?

The regulatory package is at an advanced, pre‑final stage: domestic rules and timelines are drafted and aligned with Basel III finalisation. Impact analysis indicates that, on aggregate, capital ratios will remain adequate while becoming more risk‑sensitive and comparable. The main risks relate to implementation capacity (especially for smaller banks), calibration for infrastructure and SME lending (being explored through the infrastructure‑finance capital‑treatment review described in Budget 2026) and interaction with the output floor and leverage ratio buffers for D‑SIBs.

Actions

Key actions already taken include: (i) publication of Draft 23 of the proposed amendments to the regulations relating to banks, incorporating the revised SA and IRB credit‑risk approaches, revised operational‑risk framework, leverage ratio and output floor; (ii) publication of the statement of need, expected impact and intended operation of these amendments, including quantitative impact analysis based on June 2023 data; and (iii) issuance of a Proposed Directive on Credit Risk Roadmap for consultation, which sets formal implementation milestones for SA and IRB banks under the Banks Act.

Are there plans?

The Proposed Directive on Credit Risk Roadmap (2025) sets out detailed plans: SA and revised IRB approaches take effect from 1 July 2025; IRB banks must follow a phased implementation of revised IRB parameters between 2025 and end‑2028; and the PA will monitor the combined impact, including interaction with the output floor. The 2026 Budget notes that prudential authorities are also engaging with industry on infrastructure‑finance capital treatment and on a proportional review of prudential requirements for smaller institutions, which may lead to further calibration and simplification once the Basel package is in place.

Is it on the agenda?

The 2026 Budget Review highlights prudential regulation work on Basel III reforms -- designed to withstand crises -- as part of a broader review of the banking‑regulation framework, including calibration for infrastructure finance and differentiation between systemically important banks and smaller deposit‑takers. The PA’s Regulatory Strategy 2025–2030 also lists completion of Basel III post‑crisis reforms (including for credit risk) as a strategic priority to maintain international alignment and support financial‑stability objectives.

Goals

To implement the Basel III post‑crisis standardised approach (SA) for credit risk in South Africa, recalibrating risk weights, off‑balance‑sheet conversion factors and due‑diligence requirements to produce more risk‑sensitive, comparable and credible capital ratios for banks using the standardised approach.

References

• Reference Link One
• Reference Link Two

Departments / Govt Institutions

National Treasury South African Reserve Bank (SARB)