Internal model approval process

1. An application for IRRBB model approval must demonstrate that the model has undergone a sufficiently long period of internal monitoring and has performed satisfactorily over that period. The length of this monitoring period will depend upon the performance of the ADI’s IRRBB management framework and its track record in managing and measuring IRRBB. APRA may approve the use of an IRRBB model by an ADI.
2. An ADI must obtain APRA’s approval prior to making any material changes to its approved IRRBB model. An ADI must notify APRA of any non-material changes no later than three months after making the change.
3. An ADI that has IRRBB model approval must continue to use its approved IRRBB model to determine its IRRBB capital charge unless APRA revokes the approval.
4. An ADI that has IRRBB model approval must determine its IRRBB capital charge in accordance with Attachment A to this Prudential Standard. The ADI may rely on its own internal methods and estimates for those parts of the calculation where a method or estimate is not prescribed in Attachment A to this Prudential Standard.
5. APRA may, at any time, vary or revoke an ADI’s IRRBB model approval, or impose additional conditions on the approval if it determines that:
   1. the ADI does not comply with this Prudential Standard; or
   2. it is appropriate, having regard to the particular circumstances of the ADI.
6. For an IRB ADI that does not have IRRBB model approval, the ADI must determine its IRRBB capital charge using a method specified by APRA.
7. APRA may require an ADI to reduce its level of IRRBB or increase its IRRBB capital charge.