The lending caps imposed by APRA on the banking sector may be reaching a time where they "are no longer needed," APRA chief Wayne Byres told a mutual banking conference yesterday.Byres used a speech to the Customer Owned Banking Convention in Brisbane to once more hector the wider ADI sector over lending standards. Byres may have surprised, though, with his own summary of affairs."We would ideally like to start to step back from the degree of intervention we are exercising today," he told the conference."Quantitative benchmarks, such as that on investor lending growth, have served a useful purpose but were always intended as temporary measures."Any removal of caps - on growth in investor lending and on interest-only loans - "will require us to be comfortable that the industry's serviceability standards have been sufficiently improved and - crucially - will be sustained," Byres said."We will also want to see that borrower debt-to-income levels are being appropriately constrained in anticipation of eventually rising interest rates."Byres said that "pleasingly, the industry is moving in the right direction to achieve that [removal of the lending caps]". He said: "improved serviceability standards are being developed, and policy overrides are being monitored more thoroughly and consistently."Pitching for one obstructed reform, Byres said that "the adoption of positive credit reporting, which APRA strongly endorses, will remove a blind spot in a lender's ability to see a borrower's leverage. "Coupled with the higher and more risk-sensitive capital requirements ... these developments should - all else being equal - provide an environment in which some of our benchmarks are no longer needed."The review of serviceability standards across the small ADI sector that we are currently undertaking will help inform our judgement as to how close we are to that point."