Revocation of Authority to carry on banking business
Banking Act 1959
SINCE
- on 28 October 2014 Berrima District Mutual Limited, formerly Berrima District Credit Union Ltd ABN 44 087 649 787 (the ADI) applied in writing to APRA under subsection 9A(1) of the Banking Act 1959 (the Act), to revoke its authority to carry on banking business in Australia (the Authority); and
B. I am satisfied that revocation of the Authority:
(i) would not be contrary to the national interest; and
(ii) would not be contrary to the interests of the depositors of the ADI,
I, Keith David Chapman, a delegate of APRA, under subsection 9A(1) of the Act, REVOKE the Authority.
Dated: 24 April 2015
[Signed]
Keith David Chapman Executive General Manager Specialised Institutions Division
Interpretation Document ID: 215210
In this Notice
APRA means the Australian Prudential Regulation Authority.
ADI is short for authorised deposit-taking institution and has the meaning given in subsection 5(1) of the Act.
banking business has the meaning given in subsection 5(1) of the Act.
Note 1
Under subsection 9A(5A) of the Act, the notice of revocation of the authority may state that the
authority continues in effect in relation to a specified matter or specified period, as though the revocation had not happened, for the purposes of a specified provision of the Act or the regulations, or a specified provision of another law of the Commonwealth that is administered by APRA, or a specified provision of the prudential standards, and the statement has effect accordingly.
Note 2
Under subsection 9A(6) of the Act, APRA must publish a copy of this Notice in the Gazette and
may cause notice of the revocation to be published in any other way it considers appropriate.
Note 3
Under subsection 8(1) of the Act, a body corporate is guilty of an offence if the body corporate
carries on banking business in Australia and the body corporate is not the Reserve Bank and the body corporate is not an ADI and there is no order in force under section 11 of the Act determining that subsection 8
(1) does not apply to the body corporate. A penalty of 200 penalty units applies or by virtue of subsection 4B
(3) of the Crimes Act 1914 in the case of a body corporate, a penalty not exceeding 1,000 penalty units. By virtue of subsection 8(2) of the Act, an offence against subsection 8(1) is an indictable offence. Under subsection 8(3) of the Act, if a body corporate commits an offence against subsection 8(1), the body corporate is guilty of an offence against that subsection in respect of the first day on which the offence is committed and each subsequent day (if any) on which the circumstances that gave rise to the body corporate committing the offence continue (including the day of conviction for any such offence or any later day).
Overview
The Banking Act 1959 was enacted to regulate the operation of authorised deposit-taking institutions in Australia, ensuring they are conducted safely and soundly. This legislation addresses the problem of unauthorised entities conducting banking business in Australia, which could pose risks to depositors and the national financial system. The Australian Prudential Regulation Authority (APRA) is the body responsible for administering this Act, with a key policy objective of maintaining the stability and integrity of the financial system by ensuring that only appropriately authorised institutions carry on banking business. In this context, the revocation of an institution's authority to conduct banking business is a mechanism to protect the interests of depositors and maintain the overall health of the financial sector.
Scope and Application
The Banking Act 1959 applies to any entity carrying on banking business in Australia, with particular focus on authorised deposit-taking institutions (ADIs) such as banks, building societies, credit unions, and similar entities. The Act is a Commonwealth legislation that governs the operations of these entities to ensure the stability and integrity of the financial system. The Act applies to any person or entity that engages in activities defined as banking business within the Australian jurisdiction, without distinction between states or territories. The revocation of an ADI’s authority under the Act is a significant action taken by the Australian Prudential Regulation Authority (APRA) when it is deemed that the revocation would not be contrary to the national interest or the interests of depositors. The Act also includes provisions for penalties against entities that unlawfully carry on banking business, with fines up to a substantial amount, reflecting the seriousness of operating outside the regulatory framework. The Act’s application can be extended or detailed through subordinate instruments, such as regulations or prudential standards, which provide further guidance and specifics on the implementation and enforcement of the Act’s provisions.
Key Provisions
The main operative sections of the Gazette document detail the revocation of Berrima District Mutual Limited's authority to carry on banking business in Australia. According to subsection 9A(1) of the Banking Act 1959, Berrima District Mutual Limited formally applied to the Australian Prudential Regulation Authority (APRA) to revoke its banking authority. Under subsection 9A(1), Keith David Chapman, acting as a delegate of APRA, has confirmed that the revocation would not be contrary to the national interest or the interests of the ADI's depositors. Consequently, the Authority is revoked as stated in the document.
The Banking Act 1959 imposes various obligations and requirements on authorised deposit-taking institutions (ADIs) like Berrima District Mutual Limited. These obligations include maintaining sufficient capital, ensuring liquidity, and adhering to prudential standards set by APRA. The Act also mandates that ADIs must not carry on banking business without the requisite authorisation. Berrima District Mutual Limited, by applying for the revocation of its authority, has complied with these obligations by formally withdrawing from the banking business.
The Banking Act 1959 outlines specific offences and penalties for breaches of its provisions. According to subsection 8(1) of the Act, any body corporate carrying on banking business in Australia without proper authorisation is guilty of an offence. The penalty for such an offence can be up to 200 penalty units, with a higher penalty of up to 1,000 penalty units under the Crimes Act 1914 for body corporates. Furthermore, subsection 8(2) specifies that each day the offence continues constitutes a separate offence. This continuous offence framework ensures that penalties are applied rigorously to maintain the integrity of the banking sector.