Department of Small Business Development COOPERATIVES BANKS DEVELOPMENT AGENCY Presentation to the Portfolio Committee, 20 February 2018

TABLE OF CONTENT CBDA Mandate Challenges and Solutions Way-forward

CBDA MANDATE Liquidity Support – Stabilisation Fund Supervision and Regulation Capacity Building and Development Liquidity Support – Stabilisation Fund Co-operative Banks Act of 2007 (as amended) Banks Act Exemption Notice 620 of 2014 Co-operatives Act of 2005 (as amended) National Credit Act of 2005

CHALLENGES AND SOLUTIONS Partnership between DSBD and National Treasury (CBDA) CHALLENGE SOLUTIONS Lack of participation National Payment System Fast track the use of technology (Banking Platform Project must be fully funded) R10 million invested – sefa ) Low adoption of technological banking systems Restrictive common bond that undermines growth Amendment of the Cooperatives Bank Act of 2007 as amended Regulatory burden making compliance cost very high Cooperatives Banks and CFIs are seen as inferior Establishment of the National Cooperatives Banks – capitalize through fiscus and member savings (DSBD support initiative) Lack of innovation to develop appropriate financial products

CHALLENGES AND SOLUTIONS Partnership between DSBD and National Treasury (CBDA) SOLUTIONS ACTIONS A deposit insurance fund for CFIs and Cooperatives Establish a deposit insurance fund for the CFIs (to be incorporated with the one for large banks) Amendment of the Insurance Legislation CBDA requires funding for CFIs and budget for Capacity Building support services CBDA Budget increased from R20 m to R100m Cooperatives Banks Development Agency – Stabilisation Funds to assist with liquidity challenges Budget should be increased from R 1.5 million to R 5 million

CHALLENGES AND SOLUTIONS Partnership between DSBD and National Treasury (CBDA) SOLUTIONS ACTIONS Fast track the establishment National Cooperative Bank Develop National Coops Bank strategy; Amend the Coops Bank Act, 2007; Channel government funding for SMEs and Co-operatives via the CFIs; Shift perception than coops banks are for the poor. Finalising the Banking Platform More funding is required from the fiscus – DSBD support Cooperatives Banks Development Agency (CBDA – capacity building) to be merged with Cooperatives Development Agency (CDA) – DSBD support the position – engage NT accordingly CBDA supervision unit moved to SARB on the 9th of October 2017

WAYFORWARD Development of the Cooperatives Banks Strategy; Amendment of the Cooperatives Banks Development Act, 2007; Establishment of the National Cooperatives Bank; Finalising the Banking Platform CBDA and CDA to merged – given the transformation taking place. Establish a deposit insurance fund for the CFIs

Thank You