SOUTH AFRICAN NATIONAL ASSEMBLY ADOPTS CREDIT BILL TO PREVENT OVER-INDEBTEDNESS
CAPETOWN– The National Assembly, the lower chamber of the South African Parliament, has approved the long-awaited National Credit Amendment Bill which aims to address and prevent over-indebtedness of consumers.
The Bill provides relief for over-indebted consumers earning less than 7,500 Rand (about 507 US dollars) with unsecured debt of not more than 50,000 Rand. It will directly address the plight of the poor and low-income workers who are over-indebted. It also intends to encourage and enforce responsible lending and borrowing, said acting Trade and Industry Minister Lindiwe Zulu.
The Bill was debated and adopted in the National Assembly Wednesday after it was adopted by the Portfolio Committee on Trade and Industry last Friday. It will improve the collection of bad debt among over-indebted low income consumers by credit providers.
In South Africa, approximately 879 million Rand of bad debt is collected by credit providers through debt counselling on a monthly basis. Approximately 38 per cent of 25 million credit-active consumers have impaired credit records.
During the second reading of the Bill, Zulu clarified that it is an amendment to the National Credit Act of 2005, which came into effect in 2007 with the aim to address and prevent over-indebtedness of consumers and ensure an accessible, consistent, responsible and equitable credit market.
Zulu said the Bill introduces a new effective and accessible debt counselling and personal insolvency framework for over-indebted low-income consumers.
The Bill provides a balance that addresses the needs of consumers and promotes responsible borrowing by credit providers. It also tackles concerns raised by some credit providers and distinguishes between secured and unsecured credit in accordance with the Task Team Agreements entered into in 2010.
The agreements were entered into by the National Credit Regulator and credit providers to limit the reduction for interest on unsecured debt. Taking the repo rate into account ensures that banks will not be unfairly prejudiced by a reduction. This will form part of the regulations, said Zulu.
Source: NAM NEWS NETWORK