/ 16 November 1999

COURT TAKES THE LID OFF MICROLENDERS

THE Pretoria High Court on Thursday outlawed statutory ceilings on interest rates set by microlenders. The Business Day reports that the court also ruled that microlenders will not be allowed to retain lenders’ bank cards and PIN codes as security for debts. The court heard on Thursday that some mircolenders have been charging as much as 30% interest a month. In June Minister of Trade and Industry Alec Erwin set the interest ceiling at about 13,75%. The ruling is seen as a heavy blow to government’s attempts to regulate the industry. In 1997 the industry had an annual turnover of R10,01bn with about 30500 outlets employing about 152000 people.