Banking regulation in South Africa

Banking regulation in South Africa is mainly based on the document issued by the National Treasury called “Safer Financial Sector to Better Serve South Africa”. The responsibility for protecting national currency and ensuring sustainable economic growth of the country is designated to one of the main financial regulators, SARB. In order to create a satisfying regulatory and supervisory structure, the financial authorities launched a new law called FSR in 2018. Its main functions are:

  • To protect clients of financial institutions and make sure they are treated fairly;
  • To prevent financial crime;
  • To transform the country’s financial system and make it more efficient;
  • To increase the general public’s trust in the financial system;
  • To ensure that financial institutions are safe and reliable.

The SAR’s banking sector is supervised and regulated on the basis of these legislative acts:

  • Companies Act;
  • Banking Act;
  • Mutual Banking Act;
  • Cooperative Banks Act;
  • National Payment System Act.

For entrepreneurs planning to register a banking company in South Africa it would be worth remembering that banks there are governed by these institutions:

  • FIC;
  • BSD;
  • NCR;

In addition, local authorities have also issued new requirements accompanying the Banking Law. Their goal is to ensure compliance with the BCBS. These requirements incorporate:

  • Limited liquidity claims;
  • Liquidity disclosure;
  • Revision of the liquidity;
  • Intraday liquidity management;
  • Capital disclosure;
  • Public disclosure related to the leverage ratio.

Overall, businessmen who are seeking to start conducting financial activities in South Africa need to take into consideration all conditions they will be obliged to fulfill: complying with the standards set for banks and for key stakeholders. Some of the requirements explicitly relate to financial stability.

Do you feel more confident about opening a financial institution in SAR after reading this article? We are happy if you do, but in case there are still some formalities of registration and provision of services that you struggle with, do not hesitate to contact COREDO and arrange a personal consultation.