Presentation to Portfolio Committee on Finance 28th August 2007

SACCOL MANDATE Representation Development Supervision and Regulation

DEVELOPMENT Membership Growth Paying Members

DEVELOPMENT SACCO performance Assets, deposits and loan growth 10 20 10 20 30 40 50 60 70 80 2002 2003 2004 2005 2006 2007 Millions Total Assets Deposits Net loans

Registered SACCOs in South Africa Urban - 13 Peri-urban - 7 Rural - 18

Environmental Overview Legislation Gov. Gazette 24912 Co-ops Act 2005 National Credit Act Coops Banks Bill

Issues to be addressed Definitions: Executive officer Application of the Act Constitution and functions of coop bank Prudential requirements Deposit fund and scheme Support organisation Coop Bank Development Agency Governance of the Agency Coop Banks Taxation PERSAL Laws amendments

Chapter 1: Definitions “Executive officer” Executive officers appointment In cooperatives directors MUST be elected. Request to be removed

Application of the Act Groups less than 200 members or R2 million in assets Recommend Insert a “study group” or “provision registration” category

Constitution of Coop Bank: Supervisory Committee and Audit Committee Duplication Recommend Should be one or the other

Constitution of Coop Bank: Share certificates Costly Recommend Receipt and statement should

Constitution of Coop Bank: Access to National Payment System Primary Coop Banks no access Recommend Should have access

Prudential Requirements Capital Do request more definition be given to “Shares” and Capital of a cooperative as they are often confused and open to different interpretations

Prudential Requirements Large Exposures 23.1 Concern at the wording Seems to imply that the total investments (loans to members as a total) cannot exceed 10% Should also take into account deposits into the Coop Bank

Deposit insurance and Schemes Argue that Deposit insurance is a regulatory mechanism Recommend Sole preserve of the Supervisor. Coop Banks no role in Deposit Insurance only to pay premium

Application for Registration as Representative and Support Organisation Bill does not address why one should register and what the advantages of registration are Recommend Needs to be made more explicit

Application for registration as Representative and Support Organisation Two primary organisations can form a Representative or Support Org. Proliferation Recommend At least 5 Primary Coop Banks for form

Administration of the Act Two registrar based on the TYPE of Cooperative Bank and R20 threshold. Recommend Registrar should regulate ACTIVITIES, not TYPES of Coop Banks. Reworded

Administration of the Act Relationship with other regulatory bodies. Concern at regulatory Burden Recommend All regulatory agencies draw information form the Registrar of Coop banks, and not have Coop Banks reporting all over the place

Coops Banks Development Agency General Functions Concern that the CBDA is going to be both player and referee Recommend Separation of duties. CBDA must not do development but act as wholesaler

Coops Banks Development Agency General Functions Concern that the CBDA is going to be both player and referee. Same applies to stabilisation funding vs. liquidity funding Recommend Separation of duties. CBDA must not do development but act as wholesaler

Coops Banks Development Agency Governance of the Agency Note that no Cooperative Banks on the Board Recommend 50% of board be made up of Cooperative Representative Organisations

Coops Banks Development Agency Governance of the Agency Note that no Cooperative Banks on the Board Recommend 50% of board be made up of Cooperative Representative Organisations

Other Taxation exemption Repeal of Gazette exemptions Access to Persal