Reserve Bank explains lockdown debt relief strategy
Unathi Kamlana, Prudential Authority Head: Policy, Statistics & Industry Support with the Reserve Bank speaks to Refilwe Moloto about the bank's strategy to keep households and businesses afloat during the coronavirus lockdown.
He outlines the bank's areas of regulatory support. The Reserve Bank has released recent directives to bring debt relief to the banking sector, he says.
One focus is on reducing the liquidity coverage ratio from 100% to 80% to provide additional liquidity resources to that sector during this time.
It has also reduced minimum capital requirements from 1% to zero.
The banks are now being allowed to restructure their credit exposure to their existing clients, a form of capital relief.
All of this is aimed at allowing and enabling the banks' to have additional resources to support the economy and also be able to absorb losses.Unathi Kamlana, Prudential Authority Head: Policy, Statistics & Industry Support - Reserve Bank
Refilwe sums it up in layman's terms:
Generally, the authorities would require banks to hold more in terms of reserves, and now they are allowing those limits to be reduced in order to release more to lend.Refilwe Moloto, CapeTalk Breakfast presenter
Our framework has got built-in buffers that you build up over time.Unathi Kamlana, Prudential Authority Head: Policy, Statistics & Industry Support - Reserve Bank
Listen to the interview below:
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