Big changes proposed for credit and debt during lockdown

Government could temporarily ban lenders from blacklisting consumers whose credit records have been hit by the coronavirus crisis.

According to a proposal document seen by Reuters, the Department of Trade (DTI) document said it was considering banning blacklisting and ordering the removal of any adverse information on consumers’ profiles, until 30 September or when the national state of disaster ends.

The changes would apply retroactively from 1 April, with stakeholders given until 24 July to respond to the proposal.

“Government will carefully consider any proposals … and will take all views into account before making a decision,” the DTI said, adding trade minister Ebrahim Patel would not consider the draft document until the consultation was complete.

The document has already been criticised by the opposition Democratic Alliance, which warned that the changes would hit banks’ lending appetite, pushing up the cost of credit, and allow already indebted South Africans to rack up further borrowings.

Data published by the Banking Association of South Africa (Basa) shows that South African banks have approved more than R30.6 billion in relief to individuals and businesses affected by the Covid-19 pandemic and national lockdown as of the end of June.

Separately, over R10.6 billion has been extended to distressed businesses under the Covid-19 Loan Guarantee Scheme.

“Cash flow relief for eligible individuals and businesses is critical to the preservation of jobs and businesses and to maintaining a functioning economy,” said the managing director of the Banking Association South Africa (BASA), Bongiwe Kunene.

“Banks hold in trust the salaries and savings of South Africa’s workers, professionals and businesses. It is therefore essential that we continue to extend credit responsibly and avoid blanket debt write-offs or any other actions that might place depositors’ funds at risk or otherwise undermine the integrity of the financial sector.”


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Big changes proposed for credit and debt during lockdown