SOUTH African banks will in the coming weeks offer financial relief to their clients affected by the recent unrest, with measures that might include bespoke arrangements and targeted payment relief.
However, the financial relief would not amount to debt write-offs, said the Banking Association of Southern Africa (Basa).
In its Business and Economic Recovery Update statement distributed yesterday, Basa said that enterprises that had been left without stock, without premises and without business, could not be expected to meet their financial commitments as usual.
“However, it is also important to note that financial relief cannot amount to debt write-offs. Banks use their customers’ savings to extend loans and have a responsibility to ensure that they are not exposed to undue risk of not being repaid.
“Customers who were in good standing before the unrest should contact their banks as soon as possible to see how they may best be assisted,” it said.
Basa said the recent violence and unrest had caused extensive damage to the infrastructure of banks in KwaZulu-Natal and parts of Gauteng.
The work of rebuilding and repair would take time, but with some branches and ATMs now back in service, banks were turning their attention to supporting customers whose businesses had been disrupted, to ensure that banks would remain a part of those communities where their customers lived and worked.
The association said the latest reports indicated that 1 223 ATMs and 269 branches had been destroyed.
“As safety and security is restored in affected areas, ATMs are being rebuilt and replaced and financial networks repaired. Already, ATMs and branches in many places have been repaired and restored to full service. Banks are also encouraging their customers to use digital banking platforms, which remain resilient and continue to facilitate transactions throughout the unrest.”
Despite the destruction of cashpoints, Basa said there was no shortage of cash in the affected areas.
Bank emergency response teams were working around the clock to ensure that social grants and salaries would be paid as usual at the end of this month.
To assist social grant recipients who lived in areas where ATMs and branches had been destroyed, customers would be able to use any ATM, including those not operated by their own bank, without incurring additional charges from the beginning of August to the end of September.
Banks were said to be exploring several relief measures intended to give their customers time and space to rebuild and restock businesses and enterprises. One of the measures under consideration was the provision of bridging finance while insurance claims were being processed by the South African Special Risk Insurance Association (Sasria), which was responsible for insuring against social and political unrest.
Banks said they were working with Sasria and the short-term insurance industry to find ways to simplify and shorten the claims processes.
They would take into account the documentary evidence produced by claimants when considering the provision of bridging finance facilities.
“We encourage, and will assist, those companies and entrepreneurs who receive insurance pay-outs to reinvest in opening their businesses and to continue to serve their communities and retain jobs. However, restoring business confidence requires unequivocal explanations for the cause of the violence and a credible assurance that it will not recur,” Basa said.
Basa said it was clear that some businesses hit by the unrest, particularly small, medium and informal family enterprises that might not have been insured, would need government support.
It said these businesses would need alternative relief measures, ranging from the provision of targeted grants to the suspension of rates and taxes to help reduce business expenses.
Between April last year and February this year, the banks said they had provided R293 billion in Covid-19 financial relief to their customers.
BUSINESS REPORT