The Supreme Court of Appeal this week granted the National Credit Regulator (NCR) and the Department of Trade and Industry (DTI) leave to appeal against the judgment of the Pretoria High Court setting aside the regulations capping interest rates that apply to micro loans.
The judgment setting aside the regulations was handed down in December last year by Justice JW Louw in response to an application brought by Micro Finance South Africa (MFSA).
MFSA, which represents about 500 individuals or companies that deal in micro loans, launched the application in response to regulations introduced in May last year. The new regulations slashed the maximum interest rate that microlenders can charge for a short-term credit agreement (also known as a microloan, which is a loan of up to R8 000 repayable within six months, in terms of the National Credit Act).
Lesiba Mashapa, the company secretary at the NCR, says leave to appeal is granted on the basis that there are prospects that another court may reach a different conclusion. The appeal will be heard by a full court of the North Gauteng High Court. He says this means that the 2016 regulations stand pending the outcome of the appeal.
This means that, if you take out a short-term loan, you can not be charged interest of more than five percent a month for the first loan and interest of three percent on any subsequent short-term loans in one calendar year.