Last-minute interventions by Reserve Bank Governor Lesetja Kganyago and the Banking Association SA (Basa) succeeded in persuading parliamentary authorities to give the go-ahead for the processing of amendments to the Insolvency Act, which are regarded as vital for the stability of the financial system, says a Business Day report.

Initially – as reported in Legalbrief Policy Watch at the beginning of February – the parliamentary authorities of the National Assembly and the National Council of Provinces instructed the Finance Committee not to proceed with the amendments because of time constraints ahead of the closing down of Parliament at the end of March.

Business Day says the committee itself was always keen to approve the Insolvency Act amendments, which form part of the Financial Matters Amendment Bill. However, negotiations with parliamentary authorities on Wednesday afternoon by Treasury officials and Finance Committee chair Yunus Carrim succeeded in getting approval for the processing of the amendments, which were formally approved by the committee yesterday.

Kganyago sent a letter to Carrim on Wednesday stressing the need for the amendments to the Insolvency Act if SA is to comply with international banking requirements.

’If the proposed amendments to the Insolvency Act are not processed as part of the Financial Matters Amendment Bill there will be serious ramifications for local market participants and SA financial markets more broadly,’ Kganyago warned in his letter.

Basa MD Cas Coovadia said in his letter that US banks have already indicated they would have to terminate current agreements with SA banks if the Insolvency Act remained as is.

Full Business Day report