The country's banks still need to do more to ensure that all South Africans have access to fair and cost-effective banking services, the National Treasury said after Finance Minister Pravin Gordhan's meeting with the chairpersons and CEOs of the major banks in Pretoria on Monday.
The Treasury said in a statement that Gordhan had noted the progress the banks had made in meeting the recommendations of an inquiry established by the Competition Commission in 2006 to examine competition in retail banking in South Africa.
However, there was still more that needed to be done, the Treasury said. "The services offered to middle- and low-income South Africans must be guided by simplicity, comparability, transparency, accessibility and competitive costs.
"South Africans must increasingly and more significantly experience banks as facilitators to meet their needs at an affordable cost."
Monday's meeting, which followed a similar meeting held in May 2010, discussed the role the banks could play in meeting the country's socio-economic challenges.
The Treasury said that its "twin peaks approach" to financial regulation was on track, and that legislation to be introduced in Parliament next year would lead to the creation of a dedicated market conduct regulator.
"This regulator will take steps to ensure transparency in banking fee structures, competitive banking conditions and work towards a single approach to treating customers fairly that spans across the entire financial sector, including banks."
Both Gordhan and the banks' representatives voiced concern over the rapid increase in unsecured lending in the country, which was putting poorer households at increasing risk of getting caught in a debt spiral.
Although some of this lending was by non-banking financial institutions, including retailers, the banks "could do more to ensure that they lend responsibly and do not contribute to household over-indebtedness," the Treasury said.
While the increase in unsecured lending currently posed no systemic risks to the sector, the meeting supported the close attention that the practice was receiving from the Reserve Bank's bank supervision department.
"There will be further engagement with financial and non-financial institutions on this issue so that South Africans are not over-indebted."
The meeting noted that despite the ongoing European and global financial crisis, South Africa's banks remained well-capitalized, liquid and solvent. Lending conditions had in fact improved, with credit extension beginning to rise, and the latest banking results pointing to a recovery in banks' profitability.
"In particular, the representatives of banks confirmed the build-up of corporate cash balances and noted that this was a global phenomenon, which was typical of global uncertainty and a lack of investor confidence. This provided opportunities going forward to unlock money for investment in emerging economies."