ETHICORE client, the Banking Association South Africa has together with its member retail banks reached a historic and landmark agreement with the National Treasury, to improve responsible lending and prevent households from being caught in a debt spiral.
The agreement comes against the backdrop of continued media coverage and reporting by the National Credit Regulator expressing concerns about the rate of unsecured credit being granted by banks and the level of indebtedness in the country. Whilst these do not present any financial stability at present as confirmed by the most recent September 2012 Financial Stability Review of the South African Reserve Bank, the Banking Association and National Treasury have agreed on the need to ensure that current lending trends do no create future prudential risks.
The agreement calls for several other measures to be taken, including a review of loan affordability assessments, appropriate relief measures for distressed borrowers, reviewing the use of debt orders and limiting the use of garnishee orders.
The agreement is the result of recent meetings between the Banking Association and National Treasury, including a meeting with the Minister of Finance on 27 August 2012.
Download the agreement here: Joint NT BASA Statement_Responsible Lending_02Nov2012