Govt paves the way for banks to give debt holidays and stop repossessions
- Banks will be allowed to work together to agree on the same measures to deal with clients who face losses during the Covid-19 crisis.
- This will include debt repayment holidays and debt relief, as well as restrictions on the repossession of assets.
- Usually, under South Africa’s strict competition legislation, banks can be fined billions for colluding on any aspect of business.
- But because of the coronavirus, normal rules no longer apply.
- For more stories visit Business Insider South Africa.
Government has gazetted new rules to allow banks to work together to agree on the same measures to deal with clients who face losses during the coronavirus crisis.
This will include debt repayment holidays and debt relief, as well as restrictions on the repossession of assets of those who have fallen behind on payments.
They will also be allowed to work together on new measures that will extend more credit to individuals and businesses.
Usually, under South Africa’s strict competition legislation, banks can be fined billions for colluding on any aspect of business. But given that South Africa is in a state of national disaster because of the coronavirus, normal rules no longer apply.
“The exemptions will allow South African banks to work together to devise programmes and relief measures which can help small businesses and consumers through these financial and economic challenges,” said minister of trade and industry Ebrahim Patel at a briefing on Tuesday.
Standard Bank has already given all of its business clients with a turnover of less than R20 million per year a debt repayment holiday of three months. They don't have to pay debt instalments until end-June, but interest and fees will still accrue during this time. Nedbank has also pledged debt holidays.
The banks will also be allowed to work together to ensure the continued availability of bank notes to ATMs, branches and businesses, Patel said.
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