An “ADI” is an Authorised Deposit-taking Institution. In order to accept deposits from the public, you need to be authorised to do so by the Australian Prudential Regulation Authority (APRA). There are a few different types of ADIs – such as banks, credit unions and building societies. Islamic Bank Australia is a bank, so we’re officially an ADI.
So what’s a “Restricted ADI”?
As we are starting out as a new bank, we’ve been granted a banking ADI authorisation with restrictions. The main purpose of the Restricted ADI period is so that we can build our systems, test them and then offer our products to a small number of real customers.
The main restriction is that we can only accept up to $2 million in deposits during the restricted period.
It’s a bit like the training wheels on a bike – both we, and APRA, want to check that everything is working before we offer our products to the general public. Once we are happy, and APRA are happy, then we will aim to have the restrictions removed. This will allow us to offer our products to customers in the general public.
We 100% support APRA and the Restricted ADI approach. It means that we can be confident that our systems are working well before we open up more broadly for business.
There are other restrictions on Restricted ADIs. It’s important to note that we do not currently meet the full prudential framework for an unrestricted ADI. In other words, we have some concessions granted to us whilst we build. We are working towards the full ADI requirements right now.
You should consider this if you are considering banking with us during the Restricted ADI period (though this is by invitation only as this period is largely for staff, family and friends).
How long will you be a Restricted ADI?
The restricted ADI authorisation period is two years. Restricted ADIs are expected to “graduate” to being standard ADIs within this two year period. At Islamic Bank Australia, we are aiming to move to being a standard ADI within this period.
We have been granted a time-limited Restricted ADI banking authorisation. We have until 5 July 2024 to meet the full prudential requirements, or we must surrender our banking authority (we have plans in place to protect customers and return deposits if this were to occur). During this time period we intend to obtain APRA approval so we can publicly launch.
I have more questions!
You can read more about how banks are licensed on this page on the APRA website:
Licensing guidelines for authorised deposit-taking institutions | APRA
Please reach out to us if you have further questions. You can use the Send Us a Message form to ask us any questions you have.