Ithala to caution on business loans

2009-06-26 00:00

ITHALA Development Bank has assured the finance portfolio committee of the KwaZulu-Natal Legislature that it will tread carefully before awarding loans to emerging businesses.

This follows the bank’s admission yesterday, during the committee sitting, that R190 million had been written off from non-performing loans since 2004.

Presenting the proposed bud­get of R643 million, the bank’s CEO Sipho Shabalala said that given the high number of clients who did not pay back the loans, stringent measurers are needed to monitor repayment of the approved loans.

Shabalala said that the bank will assist the clients it gives loans to, so that their businesses do not perish.

The assis­tance will include helping clients to do their financial books to make sure that they sustain their businesses and be able to pay back the loans. He told the committee that it would be virtually impossible to recover these written off loans.

The bank, said Shabalala, will review its loan collection strategies.

Alex Hamilton of the IFP queried whether the bank would be in a position to divulge the company names and owners whose loans have been written off.

Shabalala said it wouldn’t be possible as the information is confidential.

The IFP’s Roman Liptak questioned whether the bank will continue to grant loans to people related to ANC members.

Shabalala said: “We are in the process of formulating a revised lending policy framework. We have presented a proposed policy on politically exposed persons to the Economic Development and Tourism MEC. The policy framework has not been signed as it has to go through cabinet before it is approved”.

The budget proposal made provision to boost the SMMEs and community-based co-operatives. R270 million is allocated to assist SMMEs and R80 million to boost co-operatives. Shabalala said that co-operatives remain the most viable way of reaching out to rural communities and the SMMEs can stimulate the economy and create jobs, especially in the current state of the economic melt-down. He said that the lending limit for SMMEs has been increased from R15 million to R30 million.

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