NATIONAL NEWS - President Cyril Ramaphosa says Postbank is not yet in a position to be granted a licence to operate as a fully-fledged State-owned bank.

Responding to questions in the National Assembly on Tuesday, the President stressed that while financial inclusion remains a national priority, Postbank still has work to do before it can qualify for a commercial banking licence.

ANC Member of Parliament, Mdumiseni Ntuli, asked what measures government is taking to support the Postbank in obtaining its commercial banking licence and whether government has established the need to capitalise the institution. 

“According to the Minister, Postbank has not yet fully met the conditions for a banking licence, particularly around its card key management processes and compliance with prudential standards.

“Its immediate challenge is to strengthen its governance, ensure compliance with prudential standards and stabilise its finances,” President Ramaphosa said.

Government remains committed to supporting the Postbank to obtain its licence, as it is meant to play a critical role in extending affordable banking services to underserved communities, small businesses, and youth- and women-owned enterprises.

“When more South Africans, especially those in rural and underserved communities, are able to access affordable banking and credit, we unlock entrepreneurship, support job creation and stimulate growth in local economies.

“Financial inclusion also empowers youth- and women-owned enterprises, narrows inequality and builds resilience in households and communities,” he said.

The President explained that South Africa has a well-developed and competitive financial services sector and its commercial banks, development finance institutions, co-operative banks and new digital entrants, all provide a range of financial products and services to small businesses and individuals. 

“The Postbank Amendment Act was enacted to strengthen the diversity of our financial sector and ensure a dedicated focus on underserved communities.

“The Act was meant to establish Postbank as a developmental State-owned commercial bank, offering accessible financial services to all South Africans,” he said. 

The President further explained that while capitalisation will be considered, it will only take place after Postbank has been granted authorisation to establish a bank. Once authorisation is secured, the institution will have 12 months to raise the necessary funding to be registered as a bank.

He said that this will be determined by its business case, for which the Postbank board is responsible, and submitting that business case to government via the Minister of Communications and Digital Technologies.

“These steps are essential to ensure that Postbank obtains its banking licence and is able to fulfil the vital mandate that it bears to promote financial inclusion for all,” President Ramaphosa said.

In answering further supplementary questions on the matter, President Ramaphosa indicated that government will not rule out the possibility of bringing together African Bank and Postbank as part of establishing a state bank. 

He told Parliament that all available assets may need to be leveraged to extend banking services to South Africa’s unbanked population.

"There is a general agreement that we need a state bank. The key question is how we move forward to put a bank together, and how we put all key elements together - whether it resides in Postbank or whether African Bank could be part of it.

"We must remind ourselves that African Bank has other shareholders who aren't state entities. All those entities need to be synchronised to create a state bank," the President told MPs. – SAnews.gov.za

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