Payment Holidays Offered by South African Banks Due to COVID-19 | Legal Articles

 

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Payment Holidays Offered by South African Banks Due to COVID-19

With South Africa currently in lockdown, many of the major South African banks are offering payment holidays for their clients.

The financial implications that follow in COVID-19’s wake are unmatched by any other crisis faced by our country and financial institutions have geared up to do their bit to help consumers get through these difficult times.

payment holidays in South Africa

Payment Holidays in South Africa – What are They?

A payment holiday is a feature offered by financial institutes that allows you to take a temporary grace period, especially during a global crisis such as the one caused by COVID-19, lessening the financial burden of loan and/or mortgage repayments.

Payment holidays are not mandatory, but rather an option for those who are in a desperate financial situation which impacts their ability to make ends meet.

It may still be advisable for those who are able to honour their repayments comfortably, to continue doing so, to avoid the need to play “catch-up” at a later stage.

South African Banks Offering Payment Holidays

Payment Holiday Standard Bank

Standard Bank is offering financial relief for small and medium-sized businesses in the form of loan instalment relief for a total of 90 days, beginning on the 1st of April.

This relief, which Standard Bank has classified as the Coronavirus Business Interruption Payment Scheme, applies to businesses that meet the following criteria:

  • South African based business with a turnover of R20 million or less per annum
  • Your Business Current account, Bizlaunch account and Business Lending Accounts are paid up to date
  • Your business is currently in good standing
Personal Loan Relief for Businesses

For qualifying clients, instalment relief will defer payments on the following until the 30th of June 2020:

  • Home loans
  • Credit card payments
  • Vehicle loan payments
  • Personal loans

Normal fees and interest will continue to accrue over this time. Clients will be eligible for this relief if:

  • They have a Standard Bank Business Current Account
  • They are the owner of a small business with an annual turnover of R20 million or less
  • They have a Standard Bank credit card, home loan, personal loan and/or vehicle loan
  • Their accounts are not in arrears

The following clients will be excluded from the installment relief:

  • Home loans held in a trust
  • Overdrafts
  • Clients whose payments are in arrears as at the 31st of March 2020
Installment Relief for Those Earning Under R7 500 per month

You are eligible for this relief if:

  • You earn less than R7 500.00 per month and are able to prove it
  • You have a personal loan with Standard Bank
  • Your account is not in arrears as at the 31st of March 2020
  • You have a current account with Standard Bank

The following clients will be excluded from the instalment relief:

  • Overdrafts
  • Clients whose payments are in arrears as at the 31st of March 2020
Payment Relief for Students

The following are eligible for financial relief:

  • Full-time students
  • Individuals have a student loan with Standard Bank
  • Clients whose loan account is not in arrears as at the 31st of March 2020

Standard Bank has decided to offer this relief automatically to all clients who meet the above criteria. However, they are offering the option to opt-out of the instalment relief to those who wish to do so.

Furthermore, Standard Insurance is implementing a 25% cashback relief on its car insurance premiums.

FNB

As of the 1st of April 2020, FNB implemented certain measures in order to provide some relief to their business and private clients whose financial stability has been negatively impacted by COVID-19.

This assistance will apply to clients who have demonstrated reliable and consistent banking behaviour prior to the Coronavirus outbreak.

FNB will be providing the following relief to qualifying clients for a period of three months until 30 June 2020:

  • Instalment cashflow relief, during which part no instalments/repayments will be due for the specified grace period
  • A preferential interest rate will apply to the COVID-19 relief interventions
  • Zero administration fees for relief granted
  • Professional assistance with processing credit insurance claims where applicable
  • Individualised bridge facilities for individuals who need it

It’s important to note that fees and interest will continue to accumulate as usual on all outstanding balances.

ABSA

ABSA is providing relief measures that apply to their wealth, corporate, business bank, private bank and retail clients.

Their relief programme will not attract any additional administration fees and aims to provide support to corporate and business banking clients based on their unique requirements and operations.

ABSA’s programme includes a three-month payment relief and allows customers in need of short-term financial relief aimed at reducing their monthly instalments.

All clients with up-to-date accounts and who have been negatively impacted by the Coronavirus pandemic will be afforded the opportunity to opt-in for the payment relief provided by ABSA.

This relief programme allows ABSA clients the opportunity to either continue honouring their payments if they so choose, to defer payments for a period of three months or to pay reduced instalments as agreed upon by the bank.

Nedbank

The type of relief offered by Nedbank will depend on their assessment of your current loan repayment commitments.

After reviewing your loan profile, Nedbank will then consider and offer the most appropriate solution for you.

The following options may be available to those who qualify:

  • General payment holidays
  • Temporary payment arrangements that allow you to repay a reduced amount over a limited timeframe
  • Each case will be reviewed and assessed individually and the most appropriate solution will be recommended while clients are still obliged to pay their loan arrangements
  • Payment restructuring which may result in an extension of the original loan term
  • For clients who need to release their investment funds early to supplement cash flow challenges during this time, Nedbank will waive the penalty fee for up to the value of R200 000. Clients will need to provide written confirmation that the request for early release is due to a shortfall of income
  • Offer is capped at R200 000 across the board and is only valid until the 30th of June 2020

Van Deventer & Van Deventer Incorporated – Civil Litigation and Debt Collection Attorneys

Payment holidays can provide consumers and small to medium business owners in South Africa much-needed financial support during these difficult times.

If you would like more information on how payment holidays work, or for legal assistance with deciphering the terms and conditions of your bank’s instalment relief programmes, please contact our attorneys today.

Comments are closed for this post, but if you have spotted an error or have additional info that you think should be in this post, feel free to contact us.


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