Home Government Tech Policy Budget: doors open to new entrants in banking sector

Budget: doors open to new entrants in banking sector

The Australian federal budget has opened the door for new entrants into the banking sector by changing the limitation on closely-held ownership in the relevant act, removing the Prohibition on the use of "bank" by some authorised deposit-taking bodies, and changing the bank-licensing process.

According to budget papers, the government will look to relax the 15% ownership for what it terms "innovative new entrants". This will be done either at ministerial discretion or through legislation.

Authorised deposit-taking bodies with less than $50 million in capital will be allowed to call themselves banks.

On the licensing front, the government said it welcomed the review of prudential licensing arrangements by APRA.

Additionally, Treasurer Scott Morrison said on Tuesday that from 1 July, purchases of digital currency would not be subject to GST. At the moment, consumers who use digital currencies can effectively bear GST twice: once on the purchase of the digital currency and once again on its use in exchange for other goods and services subject to the GST.

Another measure is to give proprietary companies access to crowd-sourced equity funding, with an unlimited number of such shareholders.

They will be protected by the higher governance and reporting obligations that CSEF proprietary companies must meet.

"These obligations include: a minimum of two directors; financial reporting in accordance with accounting standards; audit requirements; restrictions on related party transactions; and minimum shareholder rights to participate in exit events," according to the budget papers.

Legislation is planned to let companies test new financial products and services without a licence including "providing more holistic financial advice, issuing consumer credit, offering short-term deposit or payment products, and operating a CSEF intermediary".

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Sam Varghese

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A professional journalist with decades of experience, Sam for nine years used DOS and then Windows, which led him to start experimenting with GNU/Linux in 1998. Since then he has written widely about the use of both free and open source software, and the people behind the code. His personal blog is titled Irregular Expression.