Those who earn a gross monthly income of R7 500 0r less per month and have unsecured debt that totals R50 000 or more may now have the opportunity to have their debt written off.
Parliament is in the final stages of processing a draft bill that will eradicate the debt of those who earn too little to pay off their accrued debt and have been labeled as ‘over-indebted’ by the National Credit Regulator.
The bill will form part of an amendment made to the National Credit Act, the National Treasury has estimated that this write off could cost between R13-billion and R20-billion.
The Banking Association of South Africa (Basa) informed Parliament’s trade and industry committee that banks lose billions of rands annually in an effort to assist consumers in financial distress. The assistance measures that lead to these loses, include temporary payment holidays, interest rate concessions and repayment arrangements.
The banking industry at large is opposed to the bill as this will result in a restriction in the credit of the low-income market and a study conducted by the Treasury in 2017 showed that approximately 9-million South Africans would be eligible to have their debt written off.
However, approximately 1.5-million of those eligible were chronically over-indebted and in arrears of nine months or more on their loans.
The National Credit Regulator also stated that the total outstanding value in the gross debtors book of consumer credit for the final quarter of 2017 was R1.76-trillion.
Basa stated that the total debt review portfolio across all of South Africa’s major banking retailors stood at R47.3-billion. The concessions of reduced interest rates stood at approximately R3.4-billion in December of 2016.
These figures reflected R51.4-billion and R4-billion respectively in December 2017.