Parliament’s Portfolio Committee on Trade, Industry, and Competition, along with the Standing Committee on Finance, is set to convene a meeting with South Africa’s major banks next month to probe their credit lending practices and assess their contributions toward transforming the economy, both for production and consumption purposes.
Mzwandile Masina, chairperson of the portfolio committee on trade, industry and competition, today said the upcoming session was not merely a formality but rather a “fact-finding mission”.
Masina pointed out that the engagement was part of enhanced oversight of the financial sector and its essential developmental role within South Africa.
“The meeting would be a fact-finding mission informed by observations made by the two committees following their meeting with the National Credit Regulator, National Treasury, and the Competition Commission late last year,” Masina said.
Representatives from the Banking Association of South Africa and leading financial institutions, including ABSA, Capitec, FNB, Investec, Nedbank, and Standard Bank, have confirmed their attendance.
A disconcerting trend noted by the committee was that it appeared easier for individuals to secure credit for consumption rather than for production—an observation that has raised alarms regarding equitable economic development.
Masina said this lending approach was disempowering, particularly for previously disadvantaged people.
“As Parliament, we have a constitutional duty to conduct oversight over the implementation of legislation in the interest of consumer protection and facilitating transformation. Banks, as regulated entities, should be open and fair about their lending practices, in particular, the calculation of interest, confidentiality clauses and the fine print on credit agreements,” Masina said.
“We invited the banks to engage them on issues that negatively affect ordinary and vulnerable members of society. It would be ideal if the banks worked to advance and support economic development across all segments of society.
“The meeting is to ensure that the banking sector in South Africa is open, transparent and of service to poor people to facilitate inclusion in the productive sectors of the economy. We have a responsibility as members of Parliament to oversee the sector to ensure inclusive economic growth and to protect vulnerable consumers.”
In addition to discussions with the banks, the committees are planning to invite the Financial Sector Conduct Authority (FSCA) to provide its insights on the current state of banking in South Africa.
Discussion topics will include the credit profiles within the sector, analysis of consumption versus productive credit ratios, bank charges, state savings, and implications of the Protection of Personal Information Act (POPI Act) regarding client confidentiality.
Moreover, the anticipated impact of the Conduct of Financial Institutions (COFI) Bill on lending practices and the progress made in implementing the Financial Sector Charter are also on the agenda.
These discussions aim to ensure the banking sector operates in a manner that is not only open and transparent but also genuinely serves the underserved segments of the population.
BUSINESS REPORT