MegaBanner-Right

MegaBanner-Left

LeaderBoad-Right

LeaderBoard-Left

Home » Uncategorized » Major judgement to help protect South Africans in debt: report

Major judgement to help protect South Africans in debt: report

A new Supreme Court of Appeal judgement will bring welcome relief to indebted South Africans.

According to a report by GroundUp, the ruling upheld that borrowers may not pay more than 3% interest a month on a second short-term loan taken out in a 12 month period.

The regulations were originally introduced by the National Credit Regulator and the Department of Trade and Industry.

However, these regulations were challenged by Micro Finance South Africa (MFSA) which argued it would reduce credit availability to those most in need.

The High Court originally ruled in favour of MFSA but this was overturned on appeal by a full bench of the court.

That decision was also appealed by MFSA at the Supreme Court of Appeal, which has now ruled in favour of the NCR and DTI. This means that the new regulations remain in force.

In duplum rule

While this is good news for indebted South Africans, legal experts warned that consumers still need to be cautious of taking out multiple loans.

Speaking to GroundUp, independent legal and financial advisor Leonard Benjamin said that micro-lenders are able to get around the in duplum rule (which states that borrowers can never pay more than double the loan outstanding) by offering multiple secondary loans.

“At an interest rate of 5% a month you very quickly reach that ceiling,” he said. “Borrowers at this end of the market can very quickly end up in a debt trap from which they can never escape.”


This article was sourced from BusinessTech; for the original article, click here.

To enquire about Cape Business News' digital marketing options please contact sales@cbn.co.za

Related articles

An SA first: Cape Town’s own-build solar PV plant hits 2 400 panels and counting

The City of Cape Town is making progress with its R200 million solar photovoltaic (PV) plant in Atlantis, having installed around 2 400 solar panels...

Standard Bank and NOA partner to unlock capital for energy transition with landmark guarantee facility on 349MW solar PV project

Innovative financial instruments have an important role to play in helping to unlock and accelerate capital for South Africa’s energy transition and support economic...

MUST READ

City working to resume Bayside Canal upgrade in Milnerton

The City of Cape Town’s Water and Sanitation Directorate remains committed to completing the multi-million rand Bayside Canal upgrade in Milnerton. Work on site...

RECOMMENDED

Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.