Thursday | 26 March | 2020
By Reon Janse van Rensburg
Trade and Industry Minister Ebrahim Patel has signed new regulations that will allow commercial banks to assist clients financially in a co-ordinated manner. This decision was taken in light of the expected negative impact the coronavirus will have on the already struggling South African economy.
New regulations to be published soon in the Government Gazette will allow commercial banks to share information on the best ways to restructure soured loans or to share resources about protecting banking services in South Africa.
Banks were not able to do this before, because they would have violated the Competition Act or even gained an unlawful competitive advantage over each other. The new regulations create scope for opportunities for banks to cooperate in this regard.
Banks have been in talks with the Minister of Trade and Industry to discuss exemption from certain provisions of the Competition Act since the President declared the National State of Disaster on 15 March because of the Covid 19 outbreak.
Once the new regulations have been published, banks will be able to work together to find solutions that will provide the best outcome to all their clients.
According to Cas Coovadia, MD of the Banking Association of South Africa (Basa), banks will be able to work together and because some clients may have accounts at more than one bank, banks will be able to share information, infrastructure and the payment system. This will enable banks to have a more co-ordinated and strategic approach to this matter so that they can assist clients during the corona pandemic.
More regarding consumer relief measures by banks
Over the past weekend, executives from the country’s various banks met with the President, the National Treasury as well as the South African Reserve Bank to discuss measures that the private sector could implement to minimise the impact of the coronavirus on the economy.
During the meeting, banks assured the President that commercial banks are sufficiently capitalized and healthy enough to withstand economic shocks.
There is a fear that bank customers (individuals as well as small and large businesses) will default on their loan payments as different sectors of the economy downsize their operations.
Both the private and public sectors have proposed several initiatives, which included measures to help households and businesses. The first measure implemented by the South African Reserve Bank to assist South Africans was to reduce the interest rate by 100 basis points as well as measures to curb market volatility.
Go to Solidaraty’s webpage www.corona.org.za for further news developments in this regard.
* All information was correct at the time of publication.