Where is the li­cence?

Post­bank has been wait­ing for a year to get a re­sponse to its bank­ing li­cence ap­pli­ca­tion and doesn’t know what the hold-up is

CityPress - - Business - MOYAGABO MAAKE moyagabo.maake@city­press.co.za

Post­bank’s ap­pli­ca­tion for au­tho­ri­sa­tion to es­tab­lish a bank, which it made to the SA Re­serve Bank in Septem­ber last year, has been drawn out – and the sta­te­owned com­pany does not ap­pear to know why.

“Un­for­tu­nately, we can­not com­ment on that as it forms part of the [Re­serve Bank] process,” spokesper­son Khu­lani Qoma said this week.

The ap­pli­ca­tion, which is the first in three steps to ob­tain a bank­ing li­cence, usu­ally takes up to six months.

With­out it, Post­bank will not be able to reg­is­ter a com­pany to carry on the busi­ness of a bank, which it will need to demon­strate com­pli­ance with any con­di­tions the Re­serve Bank may im­pose on it over a pe­riod of up to 12 months be­fore giv­ing it a bank­ing li­cence. Should it get the li­cence, it will have the abil­ity to lend money to its cus­tomers. The SA Post Of­fice com­pany, headed by man­ag­ing direc­tor Sha­heen Adam, has been gear­ing up to ap­ply for the li­cence for some time, and did so in Septem­ber last year. But its plans to move into lend­ing af­ter the col­lapse of African Bank, which also tar­geted less wealthy sec­tions of the pop­u­la­tion, ap­pears to be a risky move.

The Post Of­fice’s lat­est an­nual re­port shows it had R4.5 bil­lion in de­posits in the year to March 2013, up 5% on the pre­vi­ous year, while in­vest­ments were up 6% at R6.2 bil­lion. Ac­cord­ing to the re­port, it had 7.3 mil­lion cus­tomer ac­counts.

Qoma says once the bank­ing li­cence is ap­proved, Post­bank will seek per­mis­sion to ex­pand its cur­rent of­fer­ings to lend­ing.

“Our pri­mary in­ter­est is to pro­tect de­pos­i­tors and [we] will not em­bark on any strat­egy that com­pro­mises this key ob­jec­tive,” he said.

But be­sides its ex­ist­ing cus­tomers, the bank may have a ready clien­tele in less ob­vi­ous quar­ters: small-scale farm­ers. Th­ese num­ber about 2.6 mil­lion, ac­cord­ing to a 2012 study by the In­sti­tute for Poverty, Land and Agrar­ian Stud­ies.

Dawie Ma­ree, se­nior econ­o­mist at agri­cul­ture in­dus­try as­so­ci­a­tion AgriSA, said smaller farm­ers, who might al­ready be in­debted, strug­gled to ac­cess fi­nance.

“Dis­tance to banks is es­pe­cially an is­sue for small­holder farm­ers in re­mote ru­ral ar­eas,” he said. “And specif­i­cally to get ac­cess to Land Bank branches – there are very few and only in main cen­tres, so ac­cess to th­ese fa­cil­i­ties by small­hold­ers is a prob­lem.”

The Post Of­fice has close to 1 500 out­lets, some in re­mote ru­ral ar­eas, plac­ing it in an ad­van­ta­geous po­si­tion.

Ma­ree said that while he did not per­son­ally think Post­bank was widely used for farm­ing pur­poses, its planned lend­ing ser­vices could help small farm­ers in re­mote ar­eas to ac­cess credit.

“I think that lend­ing ser­vices at Post­banks can al­le­vi­ate the prob­lem. How­ever, the in­volve­ment of the Land Bank will be prefer­able,” he said. “I think a col­lab­o­ra­tion between Land Bank and Post­bank for agri-spe­cific fi­nance might be a so­lu­tion.”

Qoma could not an­swer de­tailed ques­tions re­gard­ing the lend­ing ser­vices Post­bank planned to of­fer be­cause the li­cence ap­pli­ca­tion was at a sen­si­tive stage.

“The lend­ing strat­egy is still be­ing for­mu­lated, and it is pre­ma­ture to di­vulge de­tails in this re­gard,” he said.

The Land Bank’s fi­nan­cial boss, Lebogang Serithi, said it had en­tered into part­ner­ships with a num­ber of in­ter­me­di­aries in the agri­cul­ture sec­tor to fa­cil­i­tate the pro­vi­sion of fund­ing in ar­eas where it does not have a pres­ence.

“The Land Bank is con­tin­u­ously look­ing for new part­ners, and th­ese part­ner­ships will be put in place to the ex­tent to which the Land Bank is happy with their risk mit­i­ga­tion mea­sures and/or their credit-grant­ing pro­cesses,” he said.

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