A Dedicated Banks Bill will be submitted to the South African Parliament in October this year and details of its contents will be released then, says South African Finance Minister Trevor Manuel.
In reply to a question from shadow finance minister Raenette Taljaard, who asked whether the banking supervision department of the South African Reserve Bank would be responsible for regulating the second tier of banks that will be created in accordance with the proposals advanced in his Budget speech before Parliament on June 11, he said:
“The Registrar of Banks as the head of the Bank Supervision Department
(BSD) of the South African Reserve Bank will be responsible for regulating second tier banks.
“The BSD’s role will be to supervise and regulate the activities of second tier banks in order to safeguard the depositors’ money and to ensure that second tier banks do not pose systemic and other risks to the banking industry,” Manuel said, in a written reply.
In June, Manuel said new laws would be on the table to create the second tier of commercial banks better equipped to serve millions of South Africans who were largely overlooked by large commercial banks.
He said the Dedicated Banks Bill would be one of the two bills to be tabled in Parliament to address a key financial services charter aim of improving access to financial services and redressing market failures in supplying basic financial services to the majority.
Key to the initiative was allowing a wider range of participants, such as retail companies, telecoms companies and perhaps micro lenders, into the industry by granting them banking licences with restricted banking operations.
Manuel said the other Bill — the Co-operatives Banks Bill — would soon emerge from the Treasury.
He told Parliament that “the entry requirements, in terms of capital, will be lower, but in return, the scope of their operations will be narrower and permissible investments will largely be restricted to liquid assets.”
Manuel said the Co-operatives Banks Bill would formalise this sector of the industry by affording it legal standing. It would also provide a regulatory framework that would afford depositors safety and stability. – I-Net Bridge