CAPE TOWN – The Minister of Trade and Industry, Rob Davies has welcomed the Supreme Court of Appeal’s decision to dismiss Micro Finance South Africa (MFSA) application challenging the regulations reducing the interest rate on the short-term loans.
Minister Davies in a statement on Sunday that that in 2016, MFSA challenged the regulations in the High Court that were introduced by the department and the National Credit Regulator (NCR) to provide some relief for over-indebted consumers.
These regulations reduced the interest rate on a short-term loan from 5 percent per month on the first loan to 3 percent per month on subsequent loans in a calendar year.
MFSA argued that the reduction of the interest rate would, amongst others, drive micro-lenders out of business and consumers to loan sharks.
The High Court originally ruled in favour of the MFSA and the dti appealed the judgment to the Supreme Court of Appeal (SCA). The SCA granted the dti leave to appeal the judgment to the Full Bench of the High Court.