Banks slam credit amendment bill as self-defeating

PRESSURE is mounting on Parliament to adopt the controversial National Credit Amendment Bill, which aims to create relief for over-indebted consumers, despite criticism from the banks.

Parliament’s portfolio committee on trade and industry will this week consider the bill clause by clause, to finalise the draft for the National Assembly to consider. The Banking Association SA (Basa) has, however, slammed the bill in its entirety, saying it threatened the ability of banks to extend credit to low-income consumers. Basa managing director Cas Coovadia said the bill would hurt the same poor people it was intended to protect.

“These create uncertainty for credit providers, who will not be able to accurately assess the risk of loans not being repaid. The consequences of the proposed broadened scope of the bill for consumers, the economy and sectors such as banking, retail and microlending have not been subjected to an in-depth social and economic impact assessment and engagement with relevant stakeholders,” said Coovadia.

The bill, if passed into law, would extinguish the debt of consumers who earn a gross monthly income of no more than R7 500, have unsecured debt amounting to R50 000 and who have been found to be critically indebted.

The National Consumer Tribunal and the courts would be granted the power to make debt-restructuring orders. This would include reducing interest rates, fees and charges for credit agreements in debt intervention and debt review processes to zero for a period of five years or longer.

Cosatu has, however, called for the fast-tracking of deliberations on the bill, and accused the ANC of deliberately stalling the process.

Cosatu parliamentary co-ordinator Matthew Parks said: “We are worried that this bill is being delayed... is taking too long to pass. We are also worried that the banking association is trying to collapse the bill again.

“We have seen that they have some support from officials from the Department of Treasury in government to kill it. It is a critical bill which will help workers and the indebted. Some of the banks, including Capitec, Absa and Nedbank have said they support it.”