Other banks likely to follow Standard Bank’s offer of payment breaks during Covid-19

Standard Bank announced it would be offering a three-month loan payment holiday to customers who have taken out a student loan and a business loan with the bank.

The bank’s small enterprise customers with a turnover of less than R20 million will from 1 April to end of June 2020 be relieved of paying their loans. Automatic new payment terms for these small business owners will be set up to try to assist their clients manage their cashflows and for them to be able to honour payments to their own employees.

“The relief will come from capitalising the interest and fees typically paid to the bank each month and changing the terms of repayment to a later date. This, we hope, will relieve cashflow constraints currently caused by the Covid-19 outbreak,” said Standard Bank SA CEO Lungisa Fuzile.

All student customers still studying full time with a Standard Bank student loan would have a 0% interest payment holiday over the same period, with zero fees. Customers had the option to opt out of the offer.

The bank also offered assistance to defer payment for an agreed period and an opportunity to restructure and consolidate the overall debt.

But other banks could soon follow suit, economist Dawie Roodt said. Standard Bank’s pronouncement demonstrated that they were considerate of how the outbreak could affect their clients, he told The Citizen.

“I think other banks would follow suit. The reality is everyone, whether they can afford to or not, will use the opportunity which can create a dangerous precedence, but I am sure the South African Reserve Bank knows and is aware of the ratios and liquidity requirements,” he said.

It was, however, too soon for banks to make such a “brave” decision as it was not yet clear if the global pandemic could have a negative effect on loan repayments this month.

“I think it is too soon because we haven’t seen numbers yet of people defaulting or have gone through the end of the month yet. I would have waited two weeks or until end of the month to see who retained loans and who didn’t. People take chances. If you give them a gap, they will take it. People sometimes take unnecessary chances,” Roodt said.

rorisangk@citizen.co.za

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