South African banks agree to implement debt relief measures
This comes after the banks agreed to government interventions, which will see competition laws relaxed amid the outbreak.Devdiscourse News Desk | Cape Town | Updated: 24-03-2020 18:43 IST | Created: 24-03-2020 18:43 IST
South African businesses and members of the general public on the edge of financial ruin due to the COVID-19 outbreak will breathe a sigh of relief after South African banks agreed to implement debt relief measures.
This comes after the banks agreed to government interventions, which will see competition laws relaxed amid the outbreak. The reprieve was announced by Trade, Industry and Competition Minister, Ebrahim Patel, during a media briefing on Tuesday.
On Friday, the department issued an exemption for banks to coordinate on measures that can be used to support businesses and ordinary citizens during this period.
Patel said these will allow banks to work together to devise programs and relief measures that can help small businesses, consumers and firms in destress.
"In particular, the exemption will allow the banks to coordinate on matters like payment holidays and debt relief for business and individuals in financial stress. These will also put limitations on asset repossession," said the Minister.
Banks will also coordinate on the extension of credit lines to the affected.
The exemptions will allow banks to work together to ensure the continued functioning of payment systems, as well as share information and resources to ensure the continued availability of banknotes at ATMs, branches, and businesses.
Other interventions include the Industrial Development Corporation's R3 billion relief facility with the Department for industrial funding. The facility will address the issue of vulnerable firms and extract funding for companies critical to efforts of fighting the virus and its economic impact. This will only be available to South African-owned companies.
"There are some elements to it. The first is a special intervention of R500 million, which is allocated for trade finance to import essential medical products. The second is an R700 million facility for working capital, equipment, and machinery," said Patel.
Addressing surges in demand to ensure food security is prioritized, including support for food supply chains interrupted by large companies closing down. Energy security and working capital for component manufacturers are also prioritized.
Essential services that fall outside the normal IDC sectors will now be considered.
For existing clients, the IDC is considering repayment deferments on a case-by-case basis.
Last week, the government issued a list of 22 essential products that will be monitored closely to ensure that there are no unjustified price increases. These include basic foods, personal care, hygiene products, disinfectants, cleaning agents and medical supplies such as surgical gloves and masks.
These products also include rice, maize meal, vegetables, and meat.
"We have had complaints about individuals and firms increasing prices unjustifiably. The consumer and competition commissions are now investigating 11 firms for allegedly selling products at inflated prices and abusing the situation.
"More firms are now being investigated and prosecutions will follow," Patel said.
Penalties and fines range from R1 million, up to 10% of a company's turnover or a year in jail.
(With Inputs from South African Government Press Release)
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