The banking industry disagrees with the Treasury that its lending practices could put poor households at risk of over-indebtedness and believes the lending practices of other credit providers - such as furniture and clothing retailers - should be monitored.
Chairmen, CEOs and senior bank officials met Finance Minister Pravin Gordhan and his officials on Monday to discuss the role of banks in assisting the government in meeting its development goals.
Although the thorny issue of bank fees arose again, the meeting ended on a conciliatory note and paved the way for the formation of a standing committee made up of officials from both sides.
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Issues discussed included unsecured lending, compliance with the international regulatory framework Basel 3, bank fees and industry involvement in the financing of the government’s R3.2-trillion infrastructure plan.
The Treasury said in a statement after the meeting although some unsecured credit had been advanced by retailers and other non-bank institutions, it was up to banks to do more in ensuring that they lent responsibly.
National Credit Regulator data showed unsecured credit’s share of the total credit granted was R21.95-billion for the quarter ended March - a rise of 31% compared to the first quarter last year.
But the Reserve Bank has noted this year that the growth in unsecured lending had not created a credit bubble and was not a threat to the banking system. At the end of December the exposure of banks to unsecured credit amounted to R334.9-billion - only 8% of their total gross exposure.
Banking Association of South Africa MD Cas Coovadia said on Monday that banks closely monitored data on unsecured loans.
"We are pretty confident that we are lending responsibly. Our customers also get retailers’ credit. I think the minister appreciated that he needs to speak to the entire credit providers’ industry.
"I am not too sure if we could do more - there was nothing specific that was mentioned that could be done. We did agree that we will meet in the next few weeks to discuss unsecured lending."
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