MICHAEL METELITS, Johannesburg | Thursday 12.45pm.
A NEW regulatory body, the Micro Finance Regulatory Council, want to register small-scale moneylenders who are exempted from control by the Usury Act by September of this year. The new council will be responsible for pawn-brokers, small banks, and small business lenders.
Speaking at the Wednesday media conference launching the new body, Council Chief Executive Officer Neville Zar said it is difficult to pin down the exact number of mocrolenders, but the figure is between 4000 and 8000.
The formation of the regulatory body follows criticism of the micro-lending sector by finance minister Trevor Manuel over high rates and non-payment of tax. Micro-lenders have been known to charge up to 1000% annual interest on loans under R6000. The exemption notice published on June 1 this year increases the loan size exempt from the Usury Act to R10000, provided the lender is accredited by the MFRC.
After September money-lenders who are not registered can be prosecuted, while registered money lenders will have to operate within the council’s rules and those contained in the exemption notice. In future money-lenders will only be able to charge a maximum of ten times the prime lending rate.
Zar said that once the registration process has been completed the MFRCwill embark on a consumer education programme to encourage borrowers to only go to money-lenders who displayed their MFRC registration certificate.
Businesses wishing to obtain application packs can contact the MFRC on 0860100406, or on their website at http://www.mfrc.co.za.