The Banking Association of South Africa (BASA) has strongly criticised President Cyril Ramaphosa’s signing into law of the National Credit Amendment Act on Friday, saying it will restrict the ability of banks to lend money to poor people.

The Bill provides for the write-off of the debt of heavily indebted consumers who earn a monthly income of R7 500.

The Bill will only cover unsecured debt amounting to R50 000.

The National Treasury estimates that the debt relief proposals could result in the write-off of R13 billion to R20 billion debts.

BASA says by making provision for the arbitrarily expunging of debt, the Act effectively prevents banks from extending responsible credit, particularly to low-income households.

This will mean that credit providers would have to price in the additional risk.

The Association says the move by the Ramaphosa administration will also increase the cost of credit.

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