South Africa\u2019s banking system is highly regulated, which creates a very safe and protected financial system.<\/p>\n\n\n\n
The South African Reserve Bank (SARB) has a system of regulations, oversight, and emergency mechanisms to prevent banks from failing.<\/p>\n\n\n\n
Through its Prudential Authority (PA), the Reserve Bank supervises all South African banks to ensure they remain financially sound and operate safely.<\/p>\n\n\n\n
The Prudential Authority enforces rules on capital adequacy, liquidity, and risk management through the Banks Act and Financial Sector Regulation Act.<\/p>\n\n\n\n
Banks must maintain capital buffers and liquidity coverage ratios to meet withdrawals, and regular stress testing is done to simulate severe economic conditions.<\/p>\n\n\n\n
If a South African bank faces a temporary liquidity crunch, the Reserve Bank can step in to provide emergency loans or liquidity to keep the bank solvent.<\/p>\n\n\n\n
The Corporation for Deposit Insurance (CODI), which became operational on 1 April 2024, protects South Africans in case of a bank failing.<\/p>\n\n\n\n
CODI manages the Deposit Insurance Fund (DIF) which will give depositors with positive balances up to R100,000 if their bank fails.<\/p>\n\n\n\n
The Reserve Bank can also manage the situation of a South African bank gets into serious trouble to protect depositors and the financial system.<\/p>\n\n\n\n
It also continually monitors risks to the whole financial system, including systemic risks like credit bubbles, currency shocks, or excessive household debt.<\/p>\n\n\n\n
This system creates a stable and reliable banking system which South Africa has become known for.<\/p>\n\n\n\n
More South African banks should shut down \u2013 Dawie Roodt<\/h2>\n\n\n\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/South-African-Reserve-Bank-e1750845292615-1024x577.jpg\")
<\/a><\/figure>\n\n\n\nEfficient Group chief economist Dawie Roodt argues that South Africa should allow more local banks to fail and shut down.<\/p>\n\n\n\n
Roodt is well positioned to comment on these matters. Apart from being an award-winning economist, he also worked at the SA Reserve Bank for nine years.<\/p>\n\n\n\n
He said his time at the Reserve Bank provided him with a strong foundation to analyze fiscal accounts and learn more about monetary policy.<\/p>\n\n\n\n
Roodt said the SA Reserve Bank is doing a fantastic job. However, his one criticism is that they over-control the South African banking system.<\/p>\n\n\n\n
\u201cI would like to see more banks going bankrupt,\u201d Roodt said. \u201cI would even want to see more businesses going bankrupt.\u201d<\/p>\n\n\n\n
He explained that South African banks are very well capitalized, highly liquid, and adhere to high standards.<\/p>\n\n\n\n
\u201cNothing is going to go wrong with our banking system in South Africa. However, that is not good,\u201d Roodt said.<\/p>\n\n\n\n
He explained that it is a bad thing that nothing will go wrong, because it makes banking in South Africa expensive.<\/p>\n\n\n\n
The strict standards make it difficult to run a bank in South Africa, which created an oligopoly of five dominant banks in the country.<\/p>\n\n\n\n
Roodt would like relaxed regulations which will allow for more local banks to go bankrupt and shut their doors.<\/p>\n\n\n\n
\u201cThe responsibility should be on South Africans to pick banks which are financially stable and well run,\u201d he said.<\/p>\n\n\n\n
\u201cWe currently select our banks in a different way because we know the SA Reserve Bank is doing the job of ensuring they are well run for us.\u201d<\/p>\n\n\n\n
\u201cIt should be people\u2019s personal responsibility to shop around and select a bank which is well managed.\u201d<\/p>\n\n\n\n
The foundation of a free market system<\/h2>\n\n\n\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/11\/Dawie-Roodt-1024x576.jpg\")
<\/a>Efficient Group chief economist Dawie Roodt<\/figcaption><\/figure>\n\n\n\nRoodt said the reason why he would like to see more South African banks fail is because it forms part of how a free-market system works.<\/p>\n\n\n\n
\u201cIn a free market system, we continually create and try new things. It also means that we have to continually get rid of bad things,\u201d he said.<\/p>\n\n\n\n
\u201cIt is a process of creation and destruction. That is why a free-market system is vibrant and energetic.\u201d<\/p>\n\n\n\n
When a badly run bank goes bankrupt, it means that the capital will be available for a new, better-run bank to use.<\/p>\n\n\n\n
\u201cWe need to create an environment where we can continually create new businesses, including banks.\u201d<\/p>\n\n\n\n
Roodt explained that this is why he is opposed to business rescue practitioners trying to keep struggling businesses alive.<\/p>\n\n\n\n
\u201cGet rid of the zombie companies and make it easier for new companies to be created in South Africa,\u201d Roodt said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Renowned economist Dawie Roodt explains why he believes more South African banks should go out of business.<\/p>\n","protected":false},"author":10,"featured_media":793392,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[131,1459,2562,2924,2760,4043],"class_list":["post-842857","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-banks","tag-dawie-roodt","tag-efficient-group","tag-reserve-bank","tag-sa-reserve-bank","tag-south-african-reserve-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/842857","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=842857"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/842857\/revisions"}],"predecessor-version":[{"id":842859,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/842857\/revisions\/842859"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/793392"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=842857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=842857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=842857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
<\/a><\/figure>\n\n\n\nEfficient Group chief economist Dawie Roodt argues that South Africa should allow more local banks to fail and shut down.<\/p>\n\n\n\n
Roodt is well positioned to comment on these matters. Apart from being an award-winning economist, he also worked at the SA Reserve Bank for nine years.<\/p>\n\n\n\n
He said his time at the Reserve Bank provided him with a strong foundation to analyze fiscal accounts and learn more about monetary policy.<\/p>\n\n\n\n
Roodt said the SA Reserve Bank is doing a fantastic job. However, his one criticism is that they over-control the South African banking system.<\/p>\n\n\n\n
\u201cI would like to see more banks going bankrupt,\u201d Roodt said. \u201cI would even want to see more businesses going bankrupt.\u201d<\/p>\n\n\n\n
He explained that South African banks are very well capitalized, highly liquid, and adhere to high standards.<\/p>\n\n\n\n
\u201cNothing is going to go wrong with our banking system in South Africa. However, that is not good,\u201d Roodt said.<\/p>\n\n\n\n
He explained that it is a bad thing that nothing will go wrong, because it makes banking in South Africa expensive.<\/p>\n\n\n\n
The strict standards make it difficult to run a bank in South Africa, which created an oligopoly of five dominant banks in the country.<\/p>\n\n\n\n
Roodt would like relaxed regulations which will allow for more local banks to go bankrupt and shut their doors.<\/p>\n\n\n\n
\u201cThe responsibility should be on South Africans to pick banks which are financially stable and well run,\u201d he said.<\/p>\n\n\n\n
\u201cWe currently select our banks in a different way because we know the SA Reserve Bank is doing the job of ensuring they are well run for us.\u201d<\/p>\n\n\n\n
\u201cIt should be people\u2019s personal responsibility to shop around and select a bank which is well managed.\u201d<\/p>\n\n\n\n
The foundation of a free market system<\/h2>\n\n\n\n<\/a>Efficient Group chief economist Dawie Roodt<\/figcaption><\/figure>\n\n\n\nRoodt said the reason why he would like to see more South African banks fail is because it forms part of how a free-market system works.<\/p>\n\n\n\n
\u201cIn a free market system, we continually create and try new things. It also means that we have to continually get rid of bad things,\u201d he said.<\/p>\n\n\n\n
\u201cIt is a process of creation and destruction. That is why a free-market system is vibrant and energetic.\u201d<\/p>\n\n\n\n
When a badly run bank goes bankrupt, it means that the capital will be available for a new, better-run bank to use.<\/p>\n\n\n\n
\u201cWe need to create an environment where we can continually create new businesses, including banks.\u201d<\/p>\n\n\n\n
Roodt explained that this is why he is opposed to business rescue practitioners trying to keep struggling businesses alive.<\/p>\n\n\n\n
\u201cGet rid of the zombie companies and make it easier for new companies to be created in South Africa,\u201d Roodt said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Renowned economist Dawie Roodt explains why he believes more South African banks should go out of business.<\/p>\n","protected":false},"author":10,"featured_media":793392,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[131,1459,2562,2924,2760,4043],"class_list":["post-842857","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-banks","tag-dawie-roodt","tag-efficient-group","tag-reserve-bank","tag-sa-reserve-bank","tag-south-african-reserve-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/842857","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=842857"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/842857\/revisions"}],"predecessor-version":[{"id":842859,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/842857\/revisions\/842859"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/793392"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=842857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=842857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=842857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
<\/a>Roodt said the reason why he would like to see more South African banks fail is because it forms part of how a free-market system works.<\/p>\n\n\n\n
\u201cIn a free market system, we continually create and try new things. It also means that we have to continually get rid of bad things,\u201d he said.<\/p>\n\n\n\n
\u201cIt is a process of creation and destruction. That is why a free-market system is vibrant and energetic.\u201d<\/p>\n\n\n\n
When a badly run bank goes bankrupt, it means that the capital will be available for a new, better-run bank to use.<\/p>\n\n\n\n
\u201cWe need to create an environment where we can continually create new businesses, including banks.\u201d<\/p>\n\n\n\n
Roodt explained that this is why he is opposed to business rescue practitioners trying to keep struggling businesses alive.<\/p>\n\n\n\n
\u201cGet rid of the zombie companies and make it easier for new companies to be created in South Africa,\u201d Roodt said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Renowned economist Dawie Roodt explains why he believes more South African banks should go out of business.<\/p>\n","protected":false},"author":10,"featured_media":793392,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[131,1459,2562,2924,2760,4043],"class_list":["post-842857","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-banks","tag-dawie-roodt","tag-efficient-group","tag-reserve-bank","tag-sa-reserve-bank","tag-south-african-reserve-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/842857","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=842857"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/842857\/revisions"}],"predecessor-version":[{"id":842859,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/842857\/revisions\/842859"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/793392"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=842857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=842857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=842857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}