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South Africa: Standing Committee on Finance concerned about how VBS depositors were treated

We express our strongest concern at the way ordinary depositors at VBS Mutual Bank are being treated � and appeal to the VBS management, curator, regulators and National Treasury to urgently intervene to avoid the undue distress being experienced by depositors seeking to withdraw money from the bank.

We understand that the bank is in a dire financial situation but surely money that can be released to ordinary depositors should be managed in a more efficient and humane way? As usual, with the failure of a bank, it's the poorest depositors who are suffering disproportionately and bearing the worst burden. It's just not acceptable that elderly pensioners and other poor people are having to queue through the night in the bitter cold to withdraw up to a maximum of R1 000 and have to return regularly to do so.

Surely, the communication between the bank and the depositor needs to be improved? Instead of withdrawals of up to a R1 000 a day, why is it not possible to increase the ceiling and reduce the number of withdrawals a depositor can make per week? There are other ways that can also be considered to manage the process better and we urge this be done.

We believe the government needs to finalise a Bill on a comprehensive deposit insurance scheme (DIS) which will safeguard the funds of depositors in cases of banks collapsing.

We urge that all the current investigations into wrongdoing by those within and outside the bank, including within the government, be completed swiftly and efficiently � and those identified as the wrongdoers to face the full might of the law.

We also want to see the full overall inquiry into what went wrong at VBS and how this happened finalised expeditiously. The role of the South African Reserve Bank, other relevant regulators and agencies and the National Treasury also needs to be examined. Did the regulators fail to perform effectively? Also, how has the crisis been managed since the bank was put under curatorship? Is there a need to tighten the regulations to deter the prospects of such bank failures in future? The committee would want the inquiry report to be presented to it so that these and other issues can be considered for further action.

Source: South Africa