Banks have granted financial relief worth R246.7-million on 15 009 credit agreements as of October 9, following the civil unrest in KwaZulu-Natal and parts of Gauteng in July.
Seventy-one per cent of the relief provided was on secured credit agreements (asset-based finance and mortgages), 19% on credit facilities and 10% on term loans.
Fifty-five per cent of the relief went to small businesses with a turnover of under R20-million a year.
The financial relief provided constituted payment breaks or extended terms on credit agreements. Prevailing interest obligations were maintained and interest will continue to accumulate over the life of the loan, the Banking Association of South Africa (Basa) said in a statement on October 28.
It added that those who are obliged to resume repayments of their loans at the end of the deferral period are required to do so, as the relief cannot become “debt write-offs” as banks must continue paying interest to customers who have deposited funds with them and must recover their operating costs to remain sustainable businesses.
Take-up on unrest relief offered by banks has been relatively low, even though many pre-approvals were granted, Basa noted.
According to the association, it is apparent that most businesses are reluctant to take on additional debt owing to uncertain economic conditions and that most of the affected businesses have received insurance pay-outs.
Overall, banks are not expecting many more applications for unrest relief.
However, in the normal course of business, it is standard practice for banks to assist customers in good standing, but who are experiencing temporary financial distress.
Individual banks may offer their customers tailored assistance, depending on their risk management policies.
Additionally, the repair of automated teller machines (ATMs) and bank branches vandalised and looted during the unrest is on schedule. By the end of September, 527 (29%) of the 1 813 damaged ATMs had been fixed, while 110 (39%) of the 285 damaged branches had been repaired.
Basa’s biggest concern is the condemned malls, where branches cannot be fixed until the malls are rebuilt.
However, banks and ATM operators successfully managed the last two South African Social Security Agency payment runs, and extra capacity is being added weekly.
Every month 12.5-million beneficiaries receive grants worth over R15-billion using banking infrastructure.