BASA: New debt relief law undermines banks
The Banking Association of SA says the newly announced debt relief law by the president undermines assistance efforts put in place by banking institutions.
Under the new law, those earning less than R7 500 per month may qualify for relief for debt that's no more than R50 000. This means they would have a part or total of the debt either suspended or written off. It's estimated around 9.5 million consumers stand to benefit.
The banking association's Cas Coovadia says the new law will cause some problems for banks and that there are still a number of unclear arrears yet to announced.
"Banks will probably drastically cut down their lending to that lower earning sector of the market or go the opposite direction and we see the cost of lending going up", he said.
"We are considering what options we have and then we will interact with government. The implementation date has not been gazetted as yet", Coovadia said.