Regulatory AlertsAPS 113 Capital Adequacy: Internal Ratings-based Approach to Credit Risk
The Australian Prudential Regulation Authority issued Prudential Standard APS 113 to require authorised deposit-taking institutions to maintain adequate capital for credit risk exposures using internal ratings-based approaches. The standard mandates that ADIs obtain regulatory approval to use internal data for capital calculations while ensuring their rating systems provide accurate risk assessments and integrate with credit approval and risk management functions. It establishes specific governance, validation, and independent review requirements for institutions utilizing foundation, advanced, or retail internal ratings-based methodologies.
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