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.

NBDTs are entities that offer debt securities to the public (as defined in the Securities Act 1978) and carry on the business of borrowing and lending money, or providing financial services, or both. However, they do not include registered banks. 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, deposit takers.

Trustee companies are responsible for supervising NBDTs' compliance with the prudential regulations established by the Reserve Bank.

In December 2005, government agreed that the Reserve Bank should be the sole prudential regulator of the New Zealand financial system, including the NBDT sector. The regulatory framework anticipated for NBDTs would give the Reserve Bank the role of licensing NBDTs, and developing and enforcing minimum prudential and governance requirements.

The prudential regulation of NBDTs is carried out under the Non-bank Deposit Takers Act 2013 and associated regulations (and was previously carried out 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 Q&As on the regime.

Summary of NBDT prudential requirements currently in force



Timing of requirements

Credit ratings

NBDTs are required to have a local currency (New Zealand dollar), long-term, issuer rating, given by:

  • Corporate Scorecard (CSC);
  • Fitch Ratings;
  • Moody's Investors Service; or
  • Standard and Poor's Ratings Services.

In force since 1 March 2010.


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

NBDTs that are subsidiaries 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

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

In force since 1 September 2009.


A minimum capital ratio is required to be included in NBDTs' trust deeds. This ratio must be at least 8 percent for NBDTs with a credit rating from an approved credit rating agency. For those 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 place a limit on the aggregate credit exposures of an NBDT, or the borrowing group, to all related parties to be specified in NBDTs' trust deeds. The related party exposures should not exceed a maximum limit of 15 percent of tier one capital.

The definition of "related parties" is expanded under the regulations.

In force since 1 December 2010.


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

NBDTs must notify the Reserve Bank when a director or senior officer of the NBDT (or a person who it is proposed to appointed as a director or senior officer of that NBDT) raises one or more prescribed "suitability concerns". 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) where the Reserve Bank has declined 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 an NBDT's governing body; or 2) having a qualifying interest in 20% or more of the voting securities issued by the NBDT. A transaction having this affect can only proceed with the Reserve Bank's approval.

In force since 1 May 2014