Deposit insurance regulation 'should be a priority' for South Africa

Dec 10, 2010

South Africa's banking regulator must be granted more power over lenders in the country.

This is the conclusion of a new joint report from the International Monetary Fund and the World Bank, which suggested regulation of deposit insurance should be a priority, Reuters reports.

"The absence of explicit deposit insurance regulation may have an adverse effect on the South African banks," the study stated.

Its authors also called for regulators to have the ability to suspend or cancel banking licences in the country, as well as be able to appoint a "curator" if a bank is "unable to meet its obligations".

The report also praised some aspects of the nation's economy, stating it has a sound monetary policy and is aware of inflation risks.

South Africa recently made a number of changes to tax rules - a move that, according to Bloomberg, has enabled Absa Islamic Banking to begin offering Islamic-compliant mortgages from next year.