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Banking association ‘disappointed’ by Ramaphosa's approval of debt-relief bill

The controversial bill is intended to provide relief for over-indebted consumers.

President Cyril Ramaphosa. Picture: GCIS

JOHANNESBURG - The Banking Association of South Africa on Friday said it was disappointing that President Cyril Ramaphosa has signed the National Credit Amendment Bill into law, saying the impact of this would be severe.

The controversial bill is intended to provide relief for over-indebted consumers.

The legislation will enable low-income workers, those earning an income of no more than R7.500, to remove themselves from debt through a restructuring process.

The association's Cas Coovadia said Ramaphosa shouldn't have signed the bill into law.

“We have petitioned the president for quite some time not to sign this bill in its current form because it could have constitutional matters. We did an economic impact assessment on the impact that this bill would have and the economic impact would be severe.”

DON’T TAKE OUT MORE DEBT

The Congress of South African Trade Unions (Cosatu) has cautioned consumers who are eligible for debt relief against acquiring more credit as the new law kicks in.

Cosatu was one of the proponents of the legislation.

It described the debt relief act as a victory following years of opposition to the law by the banking sector.

However, the federation’s parliamentary coordinator Matthew Parks said those qualifying to have their short-term valued debt either restructured or expunged should not view the intervention as a get out of jail free card.

“People mustn’t get excited and think they spend wildly and don’t need to pay off their debt. If the Sherrif confiscates your property, they cannot take your other items such as your beds, your child’s school uniform for school and textbooks.”

Parks also warned that consumers should be cognizant of limitations of the relief such as the fact that once they accept the intervention, they would not be eligible to apply for further credit for a certain period.

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