Changes to the controversial Community Reinvestment Bill are on the cards, but they hinge on the outcome of negotiations on the financial sector charter at the National Economic Development and Labour Council (Nedlac).
“We want to put it [the Bill] in line with the financial sector charter,” said Ministry of Housing spokesperson Mandla Mathebula, adding that the Bill would be brought to Cabinet for approval and then to Parliament by the end of the year.
He dismissed speculation that the ministry planned to withdraw the Bill, which would compel banks to lend to low-income home buyers and set targets for the number of loans to be provided. It would also ban “red-lining”, the practice by which financial institutions identify areas too risky for lending.
Earlier this week the Congress of South African Trade Unions (Cosatu) said it “had been given to understand, in engagements at Nedlac, that the government plans to withdraw” the Bill.
“Instead of using its own power, the government now wants to rely on bilaterals with the financial sector through the Financial Sector Black Economic Empowerment (BEE) Charter process,” said acting Cosatu spokesperson Patrick Craven.
Nedlac negotiations on a BEE financial sector charter are understood to be advanced and could be concluded by the end of September. The financial sector charter is expected to set targets for black ownership. However, the provision of financial services to the disadvantaged is likely to feature as one of the checkpoints on the charter BEE scorecard.
The looming changes would be the third set of alterations. The first version was withdrawn last year after it was at the centre of a war of words between banks and then housing minister Sankie Mahanyele-Mthembi. The banks maintained it forced them into unrecoverable loans.
After discussions between housing officials and the Banking Council of South Africa a revised Bill was finalised early this year. Then the Bill stalled. And in August Cabinet decided that while it accepted “the broad principles” of the Bill, it would await the outcome of the charter negotiations.