Breaking News

Canada's Consumer Price Index Rises a Less-Than-Forecast 2% in November
Tweet TWEET

South Africa’s Unsecured Lending Rules Face Changes by Late May

The Banking Association of South Africa, which represents the country’s lenders, and its members may implement changes to unsecured lending rules by May.

Cas Coovadia, managing director of Basa, said in a presentation in Johannesburg today that the association wanted to have new rules ready by the end of next month dealing with lending affordability and the garnishing of workers’ salaries when loans aren’t repaid.

South Africa’s National Treasury and the banking lobby group agreed on Nov. 1 to tighten lending rules after the number of consumers with bad credit rose to a record and the increase in loans not backed by assets led to concern that a credit bubble was developing.

The country’s National Credit Regulator reported unsecured loans granted in the fourth quarter increased at least 2 percent to 26 billion rand ($2.8 billion) from September to December last year. The regulator said expanded research showed such debt climbing 12 percent over the quarter to 29.1 billion rand. Unsecured credit now makes up 11 percent of the country’s total outstanding gross debtors’ book, it said.

“We do expect a deterioration in the unsecured lending book,” Greg Saffy, Johannesburg-based analyst for RMB Morgan Stanley, said in a note to clients on March 28. “With reduced appetite and ability to adequately service unsecured credit, we expect loan impairments to increase in the second half.”

To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.