Government Is Getting Ready To Help Failing Banks
New Laws To Help Failing Banks
This month Cabinet approved the submission of the Financial Sector Laws Amendment Bill of 2020. The bill will now be put before Parliament.
One of the purposes of the Bill is to make the SA Reserve Bank (SARB) what is called the ‘Resolution Authority‘ and to also give the SARB some other additional powers.
It also seeks to bring in a new improved framework to help financial institutes (like the banks) when they start to fail.
Get Your Money Back When Banks Fail
It is not impossible for banks to fail (Remember Saambou & African Bank v.1). Normally they get bailed out in one way or another but often it is customers left “holding the bag” and losing out when the banks fail.
One of the nicer features in the proposed amendments is the introduction of a comprehensive deposit insurance scheme which will make sure that when banks do fail, that people who have deposited funds in the bank will get their money back.
The new amendments may be well timed given how the world economy is busy taking a serious nosedive due to Covid-19 and global lockdown. Some people are still buying into the delusion that the world can take 3 months off work and things will just go back to normal afterwards. In recent times half of all credit users in South Africa were 3 months behind on at least one of their debt obligations. This has often been the yardstick for determining how consumers are managing financial pressure. These consumers are over-indebted and should be entering debt review to resolve their debt problems.
‘These consumers are over-indebted and should be entering debt review to resolve their debt problems’
In the wake of the Pandemic’s arrival and the lockdown, that figure looks set to shoot up to almost all credit users. These consumers would all then qualify for debt review and debt restructuring.
If you have been hit by payment reductions or retrenchment then talk to a Debt Counsellor soon to get advice on how to deal with your debt obligations in a reasonable way.