JOHANNESBURG - The voluntary debt-relief measures offered by South Africa’s banks to consumers over the past two years have seen the banks lose out on more than R7billion in interest, the Banking Association of South Africa (Basa) said yesterday.

The organisation said this ahead of the public hearings on the Draft National Credit Amendment Bill that are scheduled for next week.

The draft bill permits a person who as at November 24, 2017 earned less than R7500 a month and who owed less than R50000 in unsecured debt relating to credit agreements to apply to the National Credit Regulator for debt intervention.

Cas Coovadia, the managing director of Basa, said a balanced approach with regard to the implementation of new legislation should be considered to ensure that access to credit was not unnecessarily constrained. “Legislated and broad-based debt-intervention measures and criteria may make it extremely difficult for credit providers to adequately determine the risk associated with extending credit in the lower-income segments.”

Eugene Bester, who specialises in banking litigation at Cliffe Dekker Hofmeyr, said financial institutions had granted interest rate concessions of more than R3bn in the 2016 calendar year.

Ratings agency S&P Global last year flagged the high level of household indebtedness as a major risk to the country’s banking sector.

Basa said more than 5million credit-active consumers could apply for debt intervention.

Coovadia said that if the proposed legislation was not implemented correctly, it might harm both consumers and banks.

“Access to credit could potentially decrease, due to potential de-risking, and the cost of credit would increase, due to a culmination of economic factors and the recent amendments to the National Credit Act,” he said.