Namibian government tackles illegal deposit requirements
Banking institutions and other credit providers have not been complying with the Credit Agreement Act, the Ministry of Trade and Industry has revealed.Banking institutions and other credit providers have not been complying with the Credit Agreement Act, the Ministry of Trade and Industry has revealed.
According to newspaper the Namibian, the Trade Ministry has sent out a notice stating that the government is concerned about banks and credit providers' non-compliance with the current regulation, which prescribe a deposit that should be paid in cash by the client before a loan is granted.
The notice states that some providers have offered credit to purchase a vehicle without a deposit and extended the repayment period to 60 months, although the law states that a vehicle loan has to be repaid within 54 months from date of delivery.
Nedbank Namibia and Bank Windhoek are one of the institutions that have been offering 'zero percent deposit' loans.
"This normally leads to over indebtedness and irresponsible borrowing by the consumer," concludes the notice, warning that firms that do not comply with the law will be penalised.