Update: Covid-19 Relief Measures

Publication Date: 09/04/2020

Update: Covid-19 Relief Measures for Customers

South African banks have moved quickly to implement wide-ranging debt-relief measures to, wherever possible, assist customers who are experiencing financial difficulties due to the COVID-19 pandemic and national lockdown.

However, we strongly encourage all customers to continue to meet their banking and financial services obligations as best they can. This will help banks assist as many customers in need as possible and is important for the safety and soundness of the financial sector and the economy at large. Our efforts to help customers must not trigger a financial crisis and banks are working with the regulators to ensure the continued stability of the financial system.

The intention of these remedies is to ease the immediate financial demands on our customers, especially those who are most vulnerable and small businesses. Customers in good standing, who cannot meet their credit agreement payments in the short-term, as a result of the COVID-19 pandemic, should contact their banks to access these relief measures. This can be done through banks call centres, email, smartphone applications and online banking facilities, among others.

A customer is considered to be in good standing if they are up to date with their payments and have a good track record of paying their debts on time. Remedies offered by the banks for those in financial distress may include:

  • Assistance with processing credit life insurance claims. Credit life insurance policies differ, so the terms of each policy are important. However, they may cover outstanding debt in the event of death, disability or retrenchment or if the company where the customer’s is employed goes out of business. Where a customer has credit insurance, their best option may be to lodge a claim. Banks are communicating with their customers that have credit life insurance policies with the bank and will, as far as possible, assist in processing the claim.
  • Instalment reductions for an appropriate period. Interest and fees on the loan will still accumulate and will have to be paid by the customer. This may result in an extension of the term of the loan and could incur higher costs
  • A payment break or ‘payment holiday’. Interest and fees on the loan will still accumulate and will have to be paid by the customer. This may result in an extension of the term of the loan and could incur higher costs. Some banks are already offering their customers payment breaks from between one to three months, subject to their credit risk guidelines. Customers considering a payment break should contact their bank to see if it is a facility on offer.
  • The COVID-19 relief measure also applies to Shari’ah compliant financial services and products. Customers who are uncertain as to what relief is available for Shari’ah compliant products, are urged to contact their bank.
  • Banks will also help qualifying customers to access other debt relief packages, like the South African Future Trust fund and government’s small and medium enterprise relief schemes.

For customers in debt review and small, medium and micro-enterprises in business rescue:

  • Customers who are already in debt review must contact their debt counsellor who will then facilitate a new repayment proposal for their bank. Banks will apply leniency if the customer is paying less than previously agreed.
  • Small, medium and micro-enterprises, which are already in business rescue, must contact their Business Rescue Practitioner (BRP). Banks will deal with these small businesses on a case-by-case basis.

Banks understand that the COVID-19 pandemic lockdown has increased the financial stress of many of their customers through no fault of their own and that we have a responsibility to do what we can to help clients and the economy through this challenging time. However, banks are tightly regulated as they hold in trust the salaries and savings of South Africa’s workers, professionals and businesses. Our customers are both depositors and borrowers. Deposits extended as loans must be recovered to allow banks to repay, with interest, customers who expect their money on demand. The relief measures granted by banks therefore do not envisage any debt write-off, but rather leniency in terms of the repayment of loans.
The Banking Association South Africa’s (BASA) members provide accounts for over three million SASSA beneficiaries. Banks, excluding the South African Post Office, have close to 400 000 points of service. In just two days at the end of March 2020, transactions to the value of close to R5,4 billion were processed. Banks have waived the withdrawal fees for SASSA grant payments for the duration of the COVID-19 pandemic lockdown. Where beneficiaries were charged a withdrawal fee – because banks could not make the necessary changes to the system at short notice – the fee will be refunded by the banks as soon as possible.

To assist customers who want to access cash during the lockdown the banks have agreed to subsidise the cost of using the Saswitch network. Customers will not have to pay the network service cost for withdrawals at another bank’s ATM.