Regulatory Alerts2022-05-17
Reserve Bank of New Zealand Feedback Statement on Farm Lending Capital Requirements
The Reserve Bank of New Zealand issued a feedback statement finalizing changes to its Capital Adequacy Framework following a consultation on farm lending capital requirements. The regulator rejected banks' arguments that proposed risk weights were too conservative and mandated a common definition for farm lending exposures to ensure consistent application. While maintaining strict capital standards for farm loans, the Reserve Bank granted banks additional time to justify the use of shorter effective maturities for certain non-farm corporate exposures.
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