The FSC will grant new online-only banks a grace period of two or three years for the implementation of Basel III regulations, scheduled to be fully effective from 2020 for other banks – e.g. traditional banks and existing digital banks. As the FSC is preparing to issue a preliminary license to one or two additional online-only banks in May, the deferral is to give new online-only banks time to adapt to a new regulatory regime, easing their regulatory burden at the early stage of business operation. The FSC will propose amendments to relevant regulations1, expected to take effect in May. The proposal will be open for public comment from March 27 to May 7, 2019.

► (Capital regulations) Basel I regulations will apply for the first three years since the launch of a new online-only bank. Basel III regime will be phased in from the fourth year of business.
► (Liquidity Coverage Ratio) 80% or above in the first year; 90% or above in the second year; full implementation of Basel III in the third year of business.
► (Net Stable Funding Ratio) Implementation will be deferred for the first three years before its full implementation from the fourth year of business.
► (Leverage ratio) Implementation will be deferred for the first three years before its full implementation from the fourth year of business.

* Please refer to the attached file for details.