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Banks worried over new SA law giving clients debt relief

The banking industry, clothing retailers and the DA are opposing the bill.

South African banks are concerned that some of their customers will get away with not having to repay their debt.

President Cyril Ramaphosa earlier this week signed the National Credit Amendment Bill into law, setting the groundwork for over-indebted consumers to have payments suspended, in part or full, for as many as 24 months, or even scrapped if their financial situation has been found to have worsened.

The bill was opposed by the banking industry, clothing retailers who provide credit and the opposition Democratic Alliance as it would drive up the cost of loans for low-income earners, restrict lending and encourage bad behaviour from borrowers.

“It’s disappointing that after our petition, the president made no attempt to interact with the industry and understand our concerns,” Cas Coovadia, the managing director of the Banking Association of South Africa, said on Friday. “This is an issue of serious concern.”

The association did an economic impact assessment and engaged the Department of Trade and Industry, which is spearheading the bill, and found that banks will either have to price in higher risks or avoid lending to low-income customers altogether.

“This could have serious economic implications,” Coovadia said. “We will await the gazetting of the bill and details around its implementation. We will sit down and consider our other options.”

South Africa’s National Treasury estimates that the debt-relief proposals could result in the write-off of R13.2 billion to R20 billion ($1.3 billion) of debt under provisions of the bill, Johannesburg-based newspaper Business Day reported. The bill provides for the extinguishing of the debt for 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 by the National Credit Regulator.

The six-member FTSE/JSE Africa Banks Index fell 0.7% by 12:09 pm in Johannesburg on Friday, led lower by Capitec Bank, the nation’s largest unsecured-credit provider, which was down 2.3%.

© 2019 Bloomberg L.P.

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Hey. Some more free stuff for Cyril to give away. He just doesn’t seem to grasp that someone has to pay for “Free Stuff”.

More often than not its the very people he gives it to.

That’s why Cyril is so keen to give away the free stuff to those who vote for his party.He knows that those who vote for the DA are going to have to pay for it!

How did this terrible legislation pass the Constitutional test.

“I borrow money, maybe I lie about how much I actually earn, or that I have a job at all. Then I cannot pay the bank back and default using this new law.” And I am untouchable?

Result, banks stop lending to almost everyone who does not supply real collateral (like a house), and the poor definitely cannot borrow. They now have to go to “lone shark”, and pay 50% interest per month. The Loan Sharks collect through force – and ignore the laws because they work outside them anyway.

The whole thing is stupid, everyone loses.

The economy is imploding, leaving the ANC without any assets to expropriate without compensation. Then they got this bright idea – let’s expropriate debt without compensation. You have to give it to them, they never run out of stupid plans.

First, they buy votes by abusing their power over the legislative process to steal the equity of businesses by means of BEE schemes, then they buy votes from the currently disadvantaged who did not benefit from BEE schemes, by stealing the equity from BEE beneficiaries!

Each bank has a BEE scheme. Each BEE scheme has beneficiaries from the “previously disadvantaged” community. The debt owed by individuals from the assets of the banks. By cancelling the debt of individuals, the assets of the banks are actually destroyed. This means the equity and the dividends of the BEE beneficiaries are destroyed. This implies that the assets of BEE schemes are expropriated without compensation to buy votes.

Maybe this might makes sense to some socialist moron, but it makes zero sense to me.

This is how you (potentially) make money:

You identify say 20 critically indebted locals. You set up PTY to employ them at say R5,000pm (under R7,5K). The job is to apply for loan under R50K on say a 3-month employment term & then contract ends. You issue payslips as proof. The ’employees’ apply for loans under R50K to be granted.

The R49,999 loan received is split 50/50 between you and temp ’employee’. The bank gets defaulted. The NCA-bill is argued. The employee(s) depart, and you shake hands splitting profit.

Can it work?

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