Chairperson and hon members, this Bill seeks to amplify and improve certain provisions of the Banks Act, Act 94 of 1990, through the medium of amendments which, during the course of the administration of the principal Act by the Office for Banks, in consultation with foreign supervisory authorities and international standard-setting bodies, such as the Basle Committee on Banking Supervision, were found to be advisable.
The Bill improves the principal Act in order to make it accord more with international banking standards and best practices as set out in the Core Principles for Effective Banking Supervision. These so-called Basle core principles are intended to serve as a basic reference for supervisory and other authorities in all countries and internationally. Accordingly, the amendments contained in the Bill are proposed in order to ensure that the South African legal framework, in terms of which banking institutions and banking groups are regulated and supervised, remains relevant and current, and in line with the latest national and international developments and standards.
After a lengthy process of consideration, the Standing Committee for the Revision of the Banks Act, appointed by the Minister of Finance, has approved the envisaged amendments described in the Bill. The committee consists, amongst others, of representatives of the banks, the Banking Council of SA, credit unions, stokvels and the Post Bank.
The proposed amendments may be summarised as follows: first, to insert in the principal Act certain new definitions and expressions, such as ``banking group branch'', ``branch of a bank'' and ``tertiary capital'', and to amend some of the existing definitions; second, to provide for the designation, by the Reserve Bank, of more than one Deputy Registrar of Banks, but not exceeding four, from amongst its officers; third, to provide for the confidential treatment of due diligence reports, drawn up in consequence of the conducting of the due diligence audit of the financial condition of a bank; fourth, to substitute a process of review for the existing process of appeal against decisions of the Registrar of Banks. Fifth, to empower the Registrar of Banks to authorise a banking institution to use or refer to it by a name other than the one under which it is registered; sixth, to further consolidate principles of good corporate governance with regard to the membership of the audit committee of the bank; seventh, to abolish judicial management of a bank that is in financial difficulties and, instead thereof, to render the process of curatorship of such a bank more comprehensive; eighth, to increase the minimum capital and unimpaired reserve funds required to be maintained by a bank from R50 million to R250 million, and to provide for additional capital and reserve funds to be maintained by banks in respect of their trading and financial instruments; ninth, to provide for the maintenance of an aggregate of minimum capital and reserve funds in respect of a banking group; tenth, to allow banks greater flexibility in the utilisation of their liquid assets; eleventh, to introduce further safeguards in respect of large exposures constituting credit risks to banking institutions; and, finally, to create and prescribe penalties for certain further offences.
The select committee passed the Bill as presented, save for one minor amendment in clause 4, which now provides that persons called as witnesses by the board of review considering a review of the decision of the Registrar of Banks are entitled to legal representation at their own expense.
The Ministry notes the concern of the select committee that the principal Act is gender biased in certain sections. A state law adviser in attendance advised that having a different gender description in part of the Act would cause uncertainty and inconsistency as to the meaning of such sections. It needs to be far more thoroughgoing across the whole of the principal Act. We therefore commit ourselves to correcting the gender issues in the next round of amendments in the principal Act. [Applause.]
Order! I notice that we have some future bankers and economists in the public gallery. This is the Minister of Finance who has been speaking about new banking policy.
Chairperson, hon Minister of Finance and members of this House, I am not going to cover some of the issues because the Minister has covered those, but I am going to reflect on one aspect which the committee dwelt on a great deal.
Although the Select Committee on Finance has passed the Bill, it did so with stringent conditions and qualifications.
The Bill before us, as the Minister has said, is grossly gender insensitive. Almost every section of the Banks Amendment Bill makes reference to words such as ``chairman'', ``he'', ``him'' and ``himself''. It would appear superficially that only men or boys participate in the financial sector. Committee members across the political party spectrum of the Select Committee on Finance have shared their concerns on the breach of our Constitution. In my capacity as the chairperson, not as ``chairman'', of the Select Committee on Finance, I raised this concern with many persons, such as the Deputy Governor of the Reserve Bank and the parliamentary law advisers, including the state law advisers.
The opinion provided by the parliamentary law advisers is that there is no reason why the Bill in question should not be amended at this stage to make it more gender sensitive. However, officials from the Reserve Bank argued that since the principal Act uses masculine terminology for certain nouns, relying on section 6 of the Interpretation Act of 1957 - which was long before I was born - the terminology is to be interpreted as including females. The amending Bill before this House cannot be changed in isolation from the principal Act. The Select Committee on Finance was informed that, from the drafting point of view, it was correct to adopt an approach in terms of which textual amendments should, for the sake of consistency, fit like a glove into the existing arrangements.
However, the committee members felt compromised and resolved to pass the Bill with the understanding that, within 12 months, the Ministry of Finance would make the Bill gender sensitive. I humbly request the women of our country, because I regard this as a serious indictment, to exercise their patience, tolerance and understanding one more time. The Select Committee on Finance is confronted with a legal impediment, but firmly resolves to carry out its mandate, and will report to this Chamber on the progress in this regard within the next 12 months. [Applause.]
Madam Chair, hon Minister Trevor Manuel, hon colleagues, I am a supporter of the adage, ``Words are like leaves. Where they most abound, very little fruit is found.'' I therefore wish to make a fruitful contribution to this debate by being very brief.
The Bill contains a number of technical amendments dealing with issues that relate to definitions of liquid assets, reserve funds, confidentiality of the diligence audits, curatorship, limiting large exposures, banks as parts of groups, etc. Clause 5, for instance, amends section 2 of the principal Act, Act No 94 of 1990, giving permission to a bank and banking institution to use or refer to itself by a name other than the name under which it is registered.
The Bill also increases the minimum amount required to start a bank from R50 million to R250 million. This increase was necessitated by, among other things, inflationary growth since 1994, when the relevant amount was increased from R10 million to R50 million by section 45 of the Banks Amendment Act, Act No 26 of 1994. I am looking for part of my speech. Sorry. [Laughter.] I have now got it. The expansion of banks' areas of activity, inter alia, increased trading and financial instruments with the resultant additional risks, also contributed to the need for this increase. A third factor necessitating the change was the fact of increased international competition, requiring increased capital provisioning to enable South African banks to remain competitive. [Interjections.]
Order! Mr Raju, would you take your seat for a moment, please? Mr Moosa, please go ahead.
Madam Chair, will the hon member take a question?
Chairperson, no. I will do so when I have finished my speech. [Laughter.]
Please continue, Mr Raju.
Chairperson, another salient amendment is that of section 72(3) of the principal Act, proposed in clause 14 of the Bill, which will allow the banks the flexibility, subject to exemption by the registrar, to use their liquid assets for purposes of intraday accommodation at the Reserve Bank discount window. Such utilisation will be in harmony with the prevailing practice in the national payment system. The DP has no problem in supporting this Bill.
Before I sit, I would like to take this opportunity to implore the Minister to speedily address the gender issue, which has been found wanting in the framing of the principal Act. I am glad that the Minister has already alluded to this deficiency and promised to address it.
At the last meeting of the Select Committee on Finance, there was a protracted debate on why the gender issue had not been attended to in the three Bills we had debated. Despite defensive submissions by the law adviser, the chairperson Dorothy Mahlangu, whom members have just heard, remained unimpressed and took an understandably dim view of the delay in addressing this. I beseech Minister Manuel to take appropriate steps to repair the shortcoming, lest we incur the wrath of some 52% of our electorate, a scenario that would be too ghastly to contemplate. Thank you. [Applause.]
I will now take Mr Moosa's question. [Laughter.]
Minister, I think your responsibility has now been somewhat taken by Mr Raju, who is prepared to answer a question. Yes, Mr Moosa?
Chairperson, my question was somewhat philosophical. I wanted to know from the speaker what fruitfulness and the sale of fruit had to do with banking. [Laughter.]
Chairperson, I think that is something I would prefer to discuss in person with the person who asked the question. [Laughter.]
This sounds more interesting by the minute, but perhaps we should allow Minister Manuel to conclude the debate. [Laughter.]
Chairperson, I note the strong statements made by the chair of the select committee on this matter. There have been discussions about it.
I just would like to explain that there are certain bits of legislation that are generated elsewhere. This one, like the Reserve Bank Amendment Act, is generated by the Reserve Bank. We are the responsible Ministry in this instance, but it is a bit difficult for me to accept responsibility. I can merely convey the earnestness and the deadlines, and ask that the Reserve Bank take those up. But I do not know whether I can be held responsible for the deadline. I will have to convey that to the Reserve Bank, and I would like this Chamber to be alive to that reality. [Applause.]
Debate concluded.
Bill agreed to in accordance with section 75 of the Constitution.