Overview of NBDT regime

The Reserve Bank regulates non-bank deposit takers (NBDTs) in New Zealand for the purposes of promoting the maintenance of a sound and efficient financial system, and avoiding significant damage to the financial system that could result from the failure of an NBDT.

The prudential regulation of NBDTs is provided under the Non-bank Deposit Takers Act 2013 and associated regulations. Previously it was provided under the now-revoked Part 5D of the Reserve Bank of New Zealand Act 1989. A list of the specific requirements applying to NBDTs is detailed in the table below. For more information on the regime, please refer to Prudential requirements for NBDTs, and FAQs on the regime.

NBDTs are entities that make an NBDT regulated offer (as defined in section 5 of the Non-bank Deposit Takers Act 2013) and carry on the business of borrowing and lending money, or providing financial services, or both. Registered banks are not NBDTs. Regulations made under the Non-bank Deposit Takers Act 2013 may also declare a person or class of persons to be, or not to be, NBDTs. A range of entities are declared not to be NBDTs under the Non-bank Deposit Takers (Declared-out Entities) 2015.

Trustee companies also have obligations under the Act. These include ensuring certain prudential content is included in licensed NBDTs’ trust deeds. Trustees must report to the Bank any non-compliance with the Act and regulations by the licensed NBDT. Trustees are licensed by the Financial Markets Authority under the Financial Markets Supervisors Act 2011.

Summary of NBDT prudential requirements currently in force



Timing of requirements

Credit ratings

Licensed NBDTs are required to have a local currency (New Zealand dollar), long-term, issuer rating, given by one of the following approved rating agencies:

  • Equifax Australasia Credit Ratings Pty Limited (formerly known as Corporate Scorecard Pty Limited (CSC));
  • Fitch Ratings;
  • Moody's Investors Service; or
  • Standard and Poor's Ratings Services.

In force since 1 March 2010.


Licensed NBDTs that are companies or building societies must have a chairperson who is not an employee of either the licensed NBDT or a related party, and must have at least two independent directors.

Licensed NBDTs that are subsidiaries of another person are prohibited from including provisions in their constitutions that would allow directors to act otherwise than in the best interests of the NBDT.

In force since 1 December 2010.

Risk management

Licensed NBDTs are required to have a risk management programme that outlines how the licensed NBDT identifies and manages its credit, liquidity, market and operational risks. This programme is to be submitted to, and approved by, the licensed NBDT's trustee.

In force since 1 September 2009.


A minimum capital ratio (the level of capital in relation to the credit exposures and other risks of the NBDT or its borrowing group) is required to be included in licensed NBDTs' trust deeds. This ratio must be at least 8 percent for licensed NBDTs with a credit rating from an approved credit rating agency. For licensed NBDTs without a credit rating from an approved rating agency, the minimum capital ratio specified in the trust deed must be at least 10 percent.

In force since 1 December 2010.

Related party exposure limits

Related party restrictions requires a limit on the aggregate credit exposures of a licensed NBDT, or its borrowing group, to all related parties to be specified in licensed NBDTs' trust deeds. The related party exposures should not exceed a maximum limit of 15 percent of capital.

A "related party" is defined under the Act and means a director or senior officer of a NBDT, and their immediate relatives, as well as subsidiaries of the NBDT and certain of its shareholders and other persons with influence over the NBDT.

In force since 1 December 2010.


Liquidity regulations require every licensed NBDT and its trustee to ensure that the licensed NBDT's trust deed include one or more quantitative liquidity requirements that are appropriate to the characteristics of the licensed NBDT's business, and that take into account the liquidity of the licensed NBDT and the liquidity of any borrowing group.

The Reserve Bank has published guidelines for NBDTs and trustees to assist with the development of the quantitative liquidity requirements.

In force since 1 December 2010.

Suitability assessment of certain directors and senior officers

Licensed NBDTs must notify the Reserve Bank when one of its directors or senior officers (or a person who is proposed to be appointed as a director or senior officer) raises a "suitability concern". The Reserve Bank will then carry out a suitability assessment of that person. The person must cease to act in the role (or not be appointed to the role) if the Reserve Bank declines to issue a notice of non-objection in respect of the person.

In force since 1 May 2014

Changes of ownership

An application must be made to the Reserve Bank to approve a transaction that will result in a person:

  1. having the direct or indirect ability to appoint 25% or more of a licensed NBDT's governing body; or
  2. having a qualifying interest in 20% or more of the voting securities issued by the licensed NBDT.

A transaction having this affect can only proceed with the Reserve Bank's approval. The Reserve Bank must also approve if a person proposes to increase their influence above their currently permitted level.

In force since 1 May 2014