According to the authorities, the new piece of legislation is aimed at increasing the stability of the banking sector by ensuring institutions find funding from less riskier sources.
The introduction of the new levy was first announced by chancellor of the exchequer George Osborne in the governmentâs June Budget.
Mark Hoban, financial secretary to the Treasury, said that it was the culture of âexcessive risk takingâ within the industry which led to the recent global credit crisis.
Coupled with broader regulatory reform, âthe levy is intended to ensure that the banking sector makes a fair contribution that reflects the risks it poses to the financial system and the wider economy, and to encourage banks to move away from riskier fundingâ, he explained.
Representatives from the French and German authorities announced that they would be looking to implement a similar banking levy when Mr Osborne unveiled his plans earlier in the year.
Meanwhile, Mr Hoban told attendees at the annual dinner of the British Bankersâ Association that a reform of the payment culture within the sector is needed for banks to regain public trust.
By Jim Ottewill