Cabinet announced it will ask President Jacob Zuma to establish a judicial inquiry to probe South Africa's banks specifically in relation to the Gupta family.
This was triggered after the country's big four banks withdrew services from the family and their business interests.
An inter-ministerial committee headed up by Mining Minister Mosebenzi Zwane, is proposing this inquiry look at banks and their actions against the Gupta's and a possible review of the legislation that governs the banking system.
Analyst at PNB Paribas, Nic Borain provides some insights into what this inquiry would mean for our financial services system.
I think it is outlandish and wrong in so many different ways.— Nic Borain, analyst PNB Paribus
He says it is an ill-informed proposal. It comes in the same week that Jessie Duarte, deputy secretary general of the African National Congress, hinted in an ANN7 interview that the banks being in private hands is a problem for them.
The Governor of the Reserve Bank, Lesetja Kganyago, hit back saying it is an independent institution and would not bow to political pressure.
Former Reserve Bank Governor Tito Mboweni came out strongly against the statements and actions of Duarte and Zwane.
Borain says Zwane's committee proposals makes him and South Africa look stupid.
And all this could not have come at a worse time, says Borain.
What happened with the firing of Nene and the appointment of Des van Rooyen is the global capital markets basically sold our bonds which means the bond yield spiked and sold our currency, which means the currency fell, and in response the banking shares fall.— Nic Borain, analyst PNB Paribus
Listen to the interview below:
This article first appeared on 702 : Cabinet proposes inquiry to probe banks and Gupta connection