National Credit Research Articles

Does the National Credit Demonstration Policy Affect Urban Green Economy Efficiency? Evidence from the Yangtze River Delta Region of China.

A more scientific green economy efficiency indicator is constructed based on OH (2010), and a multiperiod spatial DID model is used to examine the impact of national credit demonstration policies on urban green economy efficiency in a sample of cities above the prefecture level in the Yangtze River Delta. The study confirms the following: (1) The national credit demonstration policy makes a significant contribution to the green economic efficiency of cities, and it is conducive to strengthening awareness of the rule of law in the market to regulate market order. (2) The demand for credit regulation in coastal areas has increased under the new development pattern, and the national credit demonstration policy has effectively enhanced green economy efficiency through institutional supply. (3) Under the national credit demonstration policy, the subprovincial level and above can mobilise more resources for policy refinement and support, reducing transaction costs and improving the efficiency of the green economy. (4) The impact of the national credit demonstration policy on the efficiency of Zhejiang’s green economy is more obvious; but, under the overall framework of the Yangtze River Delta, the policy has a more prominent role in promoting green economy efficiency in other provinces. Policy insights are as follows: (1) Different cities have different degrees of impact on the efficiency of the green economy from the national credit demonstration policy, and they should implement differentiated measures based on regional heterogeneity; (2) regulating the use of administrative resources and avoiding undue administrative intervention are important prerequisites for promoting regional integration to enhance the efficiency of the green economy; and (3) strengthening interprovincial credit policy synergies can help to alleviate administrative distortions of policy implementation and enhance the efficiency of the regional green economy.

DEBT RELIEF FOR CONSUMERS − THE INTERADEBT RELIEF FOR CONSUMERS − THDEBT RELIEF FOR CONSUMERS − THE INTERACTIE INTERACTION BETWEEN INSOLVENCY AND CONSUMER PROTECTION LEGISLATION (PART 2)CTION BETWEEN INSOLVENCY AND CONSUMER PROTECTION LEGISLATION (PART 2)

In March 2002 the Department of Trade and Industry established a task team to review the legislation that has an impact on consumer credit. This resulted in a detailed report containing proposals for a new regulatory framework for consumer credit. Subsequently, in June 2005 the National Credit Bill was tabled in Parliament. Measures aimed directly at resolving over-indebtedness in the form of debt rearrangement are introduced by the Credit Bill. The report also highlighted weaknesses in the current insolvency legislation especially with regard to available debt relief measures for consumers. It should, however, be noted that the 2000 Insolvency Bill inter alia provides for an alternative to insolvency proceedings in the form of a pre-liquidation composition. This article examines the interaction between current and proposed insolvency and consumer protection legislation with regard to debt relief measures for consumers. The question arises whether the current and the proposed debt relief measures, when introduced, will not overlap unnecessarily. Furthermore, the question whether these measures will provide adequate relief to deal with current demands is also addressed. The South African Law Reform Commission when proposing the pre-liquidation composition in the Insolvency Bill, did not indicate whatits relationship should be with the administration order procedure in terms of section 74 of the Magistrates Courts’ Act. The question is therefore whether a need for administration orders will still exist if the proposed legislation relating to the preliquidation composition is introduced. Lastly, as South African law does not offer debt relief to debtors who have no income and no assets, proposals by the Department of Trade and Industry in the United Kingdom for a non-court based scheme of debt relief aimed at such debtors (the so-called “NINA” cases) are investigated in order to supply guidelines for South African law reform in this regard. It is submitted that the proposals in the Credit Bill on debt re-arrangement could assist debtors to manage their debt in certain circumstances. It is furthermore suggested that a combination of the proposed pre-liquidation composition and a modified administration order procedure could offer the necessary debt relief in situations where a debtor, apart from his debt in terms of a credit agreement, alsohas other outstanding debts. Finally, it is submitted that the “NINA” scheme could offer some guidance for the reform of South African law regarding debt relief to debtors who have no income and no assets.

A Study on the Transnational Spillover Effects of Bank Risk and Sovereign Risk-From the Perspective of COVID-19 Epidemic Situation.

In recent years, the world economy and the global financial system have closely intertwined, deepened economic and financial integration via cross-border investments, financings, imports, and exports. Since banks serve as the core of a country's financial system, the risk status of banks directly affects the country's national credit and financial security. The current complexities of the international and domestic environments are increasing geopolitical risks. Moreover, there is increasing uncertainty recognition in the financial and economic development of all countries, more systemic banking risks, and sovereign risk transfer elements. In this scenario, resisting external risk input is essential to enhance risk prevention ability. Therefore, this paper adopted the VAR-based time domain and frequency model for a multi-dimensional analysis of the two perspectives of banking and sovereign risk spillover effects. The empirical results indicate that the entire sample under the static overflow effect always shows that most of the absorption is the banking sector risk, and sovereign risk is the leading risk spillover. In the frequency domain perspective, the short-term spillover effects between bank and sovereign risk are dominant. Moreover, in relation to the outbreak and continuous spread of the COVID-19 pandemic, the spillover effects are often dominated by adverse, long-term scenarios.

THE NATIONAL CREDIT ACT: NEW PARAMETERS FOR THE GRANTING OF CREDIT IN SOUTH AFRICA

The National Credit Act, which repeals and replaces the Credit Agreements Act and the Usury Act, has been assented to by the President on 10 March 2006. The Act is designed to prohibit certain unfair credit and credit marketing practices and to protectconsumers. A further objective is to promote responsible credit granting and use. The Act therefore prohibits reckless credit granting, regulates credit information and also provides for debt-reorganisation in cases of over-indebtedness by consumers. The purpose of this article is to provide an overview of the provisions of the Act and at the same time to provide an explanation of, and a commentary on the provisions discussed. In conclusion it is suggested that the Act introduces extensive changes to South African consumer credit law and that participants in the South African consumer credit market will have to review their credit practices and documentation to ensure compliance. Moreover, the Act sets out new parameters for the granting of credit as credit providers will in future have to assess a consumer’s credit worthiness before granting credit. It is pointed out that the Act has a wide field of application as it applies to a far greater number of contracts than the repealed legislation. Except for the few transactions specifically excluded from its ambit, the Act applies to all credit agreements irrespective of the type of movable goods or the amount of money involved. Consequently a large group of consumers, including the low-income consumers, will enjoy the protection of the Act. It is our submission that the Act will result in improved consumer protection, especially with regard to certain areas where protection of the consumer was lacking.We suggest that the success of the Act in practice depends on effective enforcement thereof and on consumer education. On the negative side we feel that the legislature perhaps tries to over-regulate the credit industry.

Credit and Debt in an Unequal Society: Establishing a Consumer Credit Market in South Africa, Jürgen Schraten

Reviewed by: Credit and Debt in an Unequal Society: Establishing a Consumer Credit Market in South Africa by Jürgen Schraten Rinki Dahiya BOOK REVIEW of Schraten, Jürgen. 2020. Credit and Debt in an Unequal Society: Establishing a Consumer Credit Market in South Africa. New York: Berghahn Books. 219 pp. $135 (hardcover). Consumer credit has become a feature of contemporary capitalism, as it involves illiquid citizens in the economy. Consumer loans, formerly emergency tools, have become common components of commodity supply and finally commodities themselves. People in financialized economies now normally tap into their future income; at the same time, consumer credit markets are increasing the number of debtors and preventing them from improving their standard of living, or excluding them from social life altogether (1). This book explains how the lack of liquidity has been a major source of distress for millions of people. Schraten organizes the text into five chapters in addition to an introduction and conclusion. The first chapter puts the consumer credit market in a perspective missing from earlier works. It analyzes the market as a whole, as a circuit of supply and demand, consisting of legal relations and the exchange of money. Its overview of the credit supply in South Africa shows how easily accessible but expensive consumer loans have become. Customers are attracted by clever advertisements, which depict borrowing as a responsible act, but it becomes dangerous to customers after they default on repayment. Details of future consequences are hidden in the proverbial small print, distributed over several different documents (32). The result is a growing consumer credit market with a rising number of customers having impaired records. The second chapter, “Raising the Storm of a Free Consumer Credit Market,” proceeds with a historical overview of how a monetized economy developed in South Africa. It emphasizes that the long-standing tradition of tight monetary supply still influences the political and economic notions of money. The third chapter begins with a detailed analysis of the realm of legality as developed by the National Credit Act (NCA), which has affected consumers’ economic behavior regarding credit. The chapter discusses the National Credit Regulator (NCR), the National Consumer Tribunal (NCT), debt counselors, credit bureaus, and other institutional actors; it emphasizes that the NCR and NCT were governmental bodies superior to market actors, but with restricted powers of enforcement. After this overview, it discusses the payment system, often considered an overlooked component. [End Page 134] The fourth chapter shows how the National Credit Amendment Act was an important step toward preventing irresponsible lending to those with the lowest income. It highlights a dramatic discrepancy between the acknowledgement of existing problems with the NCA and suggestions for remedies. It reviews legislative amendments and suggests a completely new procedure, called debt intervention, arguing that the powers of the NCR and NCT should be outlined more clearly to prevent irresponsible lending. It concludes by looking at international consumer-credit-market frameworks, revealing that the South African NCA was mostly influenced and shaped by unique traits of Australian, Canadian, English, French, New Zealand, and Welsh laws. The fifth chapter, “The Model of Rational Action in the South African Consumer Credit Market,” analyzes the roots of power and the legitimacy of societal settings. It splits into two sections: the first analyzes the South African consumer credit market from a reflexive level of observation, revealing that the credit market has been shaped by the idea of self-governing markets and economic rationality; the second section recounts the arguments of Georg Simmel, Adam Smith, Max Weber, and other classical theorists to grasp the paradigmatic rationality established in industrialized market economies. The final chapter concludes the book by reviewing how economic settings produce a complex network revolving around distributed agency, in effect proving that the NCA cannot prevent basic free-market problems. This book differs from other scholarly works in its concentration on the economic effects a legal framework has on market participants’ equality. According to Schraten, “the public legitimation of the South African Consumer credit market and the idea of naturally and freely interacting economic actors are revealed as deceptions” (181). The book—not an examination of credit and debt, but an account of the...

Impact of Leveraged Lending Guidance: evidence from nonbank participation in syndicated loans

PurposeThe purpose of this study is to examine the impact of supervisory Leveraged Lending Guidance (LLG) (2013–2014) on risk and structure of syndicated loans arranged by the largest US banks with participation of nonbank lenders.Design/methodology/approachThis study uses supervisory shared national credit loan-level data from 2010 to 2015 and DealScan loan origination data and use linear regressions with clustered standard errors.FindingsThis study finds that the impact of the LLG was mixed. Incidence and risk of leveraged lending declined following the Guidance, as reflected in lower nonbank syndicate participation. However, the covenant protections weakened and loan spreads at origination declined. This study also provides evidence that some risky lending originations shifted to nonbank entities outside of the banking regulatory environment.Originality/valueThis study contributes and expands literature on the impact of regulatory guidance on loan risk, terms and structure, focusing on nonbank participation in syndicated commercial loans.

Transformation of capitalism to enforce ecologically sustainable GDP growth: lessons from Keynes and Schumpeter

An economy with a low stable medium-term growth rate given by ecological needs is only possible after a radical reform of the type of capitalism we have today. In an ecologically sustainable economic system, aggregate demand has to be controlled on a macroeconomic level. Of focal importance is the steering of investment. Here a national credit plan that fixes the national credit volume and to a certain extent the allocation of credit is in the centre. For consumption demand in a low-growth economy it is important that saving is low or in a zero-growth economy even zero, whereas at the same time accumulation of deficits of economic sectors or sub-sectors such as poorer households are not sustainable. Here policies to achieve a more equal distribution of income and wealth are suitable. Although comprehensive government interventions and rules are needed in an ecologically low-growth economy, the recommended system is not comparable with a planned system of the former Soviet type. Whether such an alternative system is understood as a version of highly regulated capitalism or as a new system is a question of taste.

АНАЛИЗ ПРОИЗВОДСТВЕННО-ФИНАНСОВОЙ И ФИНАНСОВОЙ МОДЕЛИ КИТАЙСКО-РОССИЙСКОГО СОТРУДНИЧЕСТВА В НЕФТЕГАЗОВОЙ ОТРАСЛИ

Sino-Russian energy cooperation has always been an important area of economic relations between China and Russia. The two countries have been achieving fruitful results in this area for many years, especially in the field of oil and natural gas. In recent years, this cooperation has become closer. Supported by intergovernmental agreements, it is based on crude oil trading with capital as a link, national oil companies as carriers and national credit as a guarantee. Industrial financialization is the future of the oil and gas industry. In this regard, building a model of production and financial integration of the Chinese-Russian oil and gas industry has become an important problem that Chinese and Russian energy companies will have to face in the framework of current cooperation. At the same time, with the strengthening of oil financing, the horizons of domestic and foreign scientists have expanded to the field of industrial finance, and the use of industrial finance theory to analyze the problems of the international oil market has become one of the main research prospects.

Pricing Strategy of Electric Power Data Credit Product Based on Customer Value

With the improvement of the intelligence level of the power network and the gradual improvement of the information and communication of the power system, the application of power big data to the corporate credit market is not only an important supplement to the national social credit system but also an important strategic goal for the State Grid to expand profitability. This paper constructs a benefit evaluation model for power data credit investigation products based on the utility of the products that financial institutions experience when they purchase and use financial risk control products. Based on the theory of customer value, comprehensively considering the characteristics of power credit reporting products, and taking profit maximization as the corporate goal, the pricing of a single power credit reporting product is studied, and the method is verified using example products. This article gives the pricing strategy of power credit investigation, which can be used as a reference for enterprises to further develop market strategies.

The middle remains missing: class exclusion from the urban rental market in suburban Johannesburg

There is a huge demand for housing in Johannesburg, South Africa, due to significant in-migration as well as the legacy of apartheid. Rental housing supply in Johannesburg is particularly constrained. Despite this, little is known about the formal rental market in terms of middle income access. Thus, this explorative qualitative study seeks to partially address this research gap. Results show that specific legislative constraints, namely the National Credit Act and the Prevention of Illegal Eviction and Unlawful Occupation of Land Act, have created an imbalance between the rights and responsibilities of landlords and tenants, driving onerous credit checks and documentary demands, all of which are inadvertently excluding individuals from the formal rental market. Thus, while race previously excluded many from the suburbs under study, class now seems to be a significant factor in terms of who can access rental property. As such, rental housing supply is to some degree artificially constrained.

Characteristics of Unbanked Households in the Republic of Congo

The objective of this article is to highlight the characteristics of unbanked households in the Republic of Congo. Starting from the Binomial Logit model based on data from the survey conducted by the National Credit Council (2015), the results show that age, gender, marital status, average income, holding an account with mobile money services, socio-professional category, type of employer are categories whose characteristics help define the profile of unbanked households in the Republic of Congo. Based on the results obtained, we can define the profile of an unbanked household in the Republic of Congo as follows: the unbanked Congolese household is most likely female, under 35 years of age, unmarried, does not have an account with mobile money services, is not a manager, works in the public sector and has an average income of less than 150,000 CFA francs. We recommend the public authorities to expand the device "payment of wages by bank account" to the private sector.

Анализ кредитного портфеля и кредитного риска в коммерческом банке

The implementation of a competent credit policy, the formation of a balanced loan portfolio, and the minimization of a level of credit risk are the main tasks of banking management. Credit operations of commercial banks have been and remain the most profitable and the banking sector profitability directly affects the financial market sustainable development. The main purpose of the study is to analyze the commercial bank credit activity and a credit risk on the example of the HCF Bank LLC commercial bank. The paper analyzes the structure of the bank’s loan portfolio, the overdue debt level, and the credit transactions restructuring. The authors performed the centralized and decentralized (coefficient) analysis of the commercial bank credit activity. The centralized analysis results showed the bank’s full compliance with the standards regulating lending activities. Ratio analysis revealed a downward trend in the quality of the retail customers’ loan portfolio due to an increase in the overdue debt and, consequently, an increase in credit risk. Based on the results of the study, the authors came to a conclusion that the level of the commercial bank credit activity for the analyzed period is high. The commercial bank has a low diversified loan portfolio, which makes it dependent on the loyalty and solvency level of its main individual customers. The assigned international and national credit ratings indicate a high degree of the commercial bank creditworthiness in the medium term period. The analysis of bank procedures for the work with credit risks shows that the bank follows the standard policy in the sphere of credit risk management. However, to avoid the growth of the riskiness level of credit operations and maintain the quality of the loan portfolio at a high level, the commercial bank should introduce more effective measures of managing credit risk, such as limiting, diversifying, and securing.

Legal Determinants of Accountability of Credit Union Members

The financial crisis of 2007-2009 has triggered the development of legal solutions aimed at reducing economic turmoil by, in particular, increasing the responsibility of shareholders of financial institutions for the failure of the latter. The solutions in question include, inter alia, procedures of forced restructuring of financial institutions and establishment of the level of the so-called MREL for them. Counted among these institutions are also credit unions, the legal situation of which entities shows a number of peculiarities. They operate not for profit, have a highly dispersed ownership structure and limited opportunities to raise capital and, above all, members of the credit union as a cooperative society play a dual role in it - both that of shareholders and one of service users (consumers). The Polish lawgiver has made national credit unions subject to the rules of forced restructuring and MREL despite their exclusion from the European law regulations in force in that respect and placed them within as many as two separate legal regimes under which the solutions can potentially be applied. The aim of the paper is to consider whether - taking into account the legal structure of Polish credit unions - the solutions adopted under the aforementioned regimes may actually serve to increase the responsibility of credit union members for the institutions they co-own, and looking in a broader perspective - whether and to what extent they can generally contribute to successful operation of credit unions. In pursuit of the goal, attempts were made to combine dogmatic research (with the employment of the verbal logic method) with an analysis of the functions of the legal norms aimed at achieving the desired economic effects, taking into account the values the credit unions adhere to - on a global scale - as cooperatives run "not for profit, not for charity, but to serve”, as their motto reads. Thanks to the considerations done it was ascertained that burdening Polish credit unions with MREL requirements has been, in fact, an inappropriate solution, inadequate both to the structure of their ownership funds and the goals for which these requirements were established, since the goals include, at the outmost, protection of union members as consumers, and not burdening them - as small shareholders – with the risk of the business conducted by the members to satisfy their own needs.

AI-Based Consumer Credit Underwriting: The Role of A National Credit Database

AI-Based Consumer Credit Underwriting: The Role of A National Credit Database

The Impact of International and National Credit Rating Level on Capital Structure Optimization: Evidence from Indonesia Non-Financial Listed Firms

Credit rating is a measure of a firm's creditworthiness in financial markets. The cost and benefit given from credit rating is supposed to affect the capital structure decision in the following year. This research examines the effect of each rating level on the capital structure level and examines how credit ratings are substantial for the firms to reach the optimal capital structure. It will also compare the impact of credit ratings from different agencies. Quarterly data of 110 firms that fulfil the requirements are gathered from 2010 until 2021. Panel data analysis using the fixed effects method shows a nonlinear U-shape between Standard & Poor's and Fitch's credit rating on capital structure level and on the distance to optimal capital structure level. Low and high rated firms tend to have higher debt levels in the following year and have a larger distance to the optimal capital structure level. Meanwhile, mid rated firms have lower debt levels and smaller distances. However, the result is opposite using Moody's rating and insignificant using PEFINDO's rating. This research suggests that credit rating is important to the capital structure decisions and other Indonesia firms could acquire credit rating especially from international rating agency.

ENFORCEMENT OF A CREDIT AGREEMENT WHERE THE CONSUMER HAS APPLIED FOR DEBT REVIEW IN TERMS OF THE NATIONAL CREDIT ACT 34 OF 2005 First Rand Bank v Smith (unreported case number 24208/08 (WLD))

Section 86 of the National Credit Act 34 of 2005 (NCA) provides for the debt relief mechanism envisaged in section 3(g) of the Act by affording the overindebted consumer the opportunity to apply to a debt counsellor for a review of the credit agreements to which he or she is a party and eventually to be declared over-indebted by the court. The effectiveness of the debt review process obviously depends on a positive working relationship between all role players, namely the over-indebted consumer, credit providers and debt counsellor, but also on the extent in which the legislator has succeeded to regulate all aspects of the said process properly. According to a recent newspaper report more than 58 000 consumers have applied for debt review in terms of section 86. However, hardly any of these cases have managed to proceed through our courts. Apart from the lack of co-operation between the said role players, it iscommonly accepted that legislative gaps contribute to the ineffectiveness of the debt counselling process. In First Rand Bank v Smith (unreported case no 24208/08 (WLD)) the court, however, indicated a lacuna in the Act which, it is submitted, was not in actual factpresent in the Act.

CONSUMER PROTECTION LEGISLATION AND PRIVATE INTERNATIONAL LAW

Although South African private international law is primarily based on bilateral and multilateral reference rules, the legislator in recent consumer protection legislation rather employs unilateral conflict rules by the identification of rules of immediate application and in the form of scope rules. The relevant provisions in the Electronic Communications and Transactions Act 25 of 2002, the National Credit Act 34 of 2005 and the Consumer Protection Act 68 of 2008 are discussed, together with the role that the traditional conflict rules still play. A new rule of private international law for consumer contracts is proposed; in this regard the principle of preferential treatmentwill play a role in the context of alternative reference rules.

WHY THE NEED FOR CONSUMER PROTECTION LEGISLATION? A LOOK AT SOME OF THE REASONS BEHIND THE PROMULGATION OF THE NATIONAL CREDIT ACT AND THE CONSUMER PROTECTION ACT

Two statutes focusing on consumer protection have been introduced recently: the Consumer Protection Act due to come into effect in October 2010 and the National Credit Act. There are many who criticize this legislation, arguing that this will overburden the economy and will lead to significant costs for business. In this article I examine some of the reasons why the Department of Trade and Industry deemed it necessary to introduce consumer protection legislation. I conclude by arguing that despite the increased costs for business, the legislation is necessary in order to prevent the exploitation of consumers by business that presently exists in South Africa. I do not, however, seek to answer the question whether this legislation will achieve its lofty aims. This, only time will tell. However, many acknowledge that the introduction of the National Credit Act shielded South Africa from some of the worst excesses of the global recession of 2008/2009. It is hoped that the Consumer Protection Act will likewise change the way many in South Africa do business.

TERMINATION OF DEBT REVIEW IN TERMS OF SECTION 86(10) OF THE NATIONAL CREDIT ACT AND THE RIGHT OF A CREDIT PROVIDER TO ENFORCE ITS CLAIM Standard Bank of South Africa Ltd v Kruger (unreported case number 45438/09 (GSJ)) and Standard Bank of South Africa L

One of the purposes of the National Credit Act 34 of 2005 (NCA) is to protect consumers by inter alia providing mechanisms for resolving overindebtedness. Section 86 of the NCA provides for such measure in that it allows a consumer to apply to a debt counsellor to conduct a debt review of the credit agreements to which he is a party and to be declared over-indebted. One of the first steps in the debt review process is therefore, a determination by the debt counsellor whether the consumer is over-indebted, likely to become over-indebted, or not over-indebted at all. Where the debt counsellor concludes that the consumer is indeed over-indebted, section 86(7)(c) requires of the debt counsellor to issue a proposal recommending that the Magistrate’s Court make an appropriate order to declare one or more of the consumer’s credit agreements to be reckless credit (if applicable) and/or to re-arrange or restructure theconsumer’s obligations. In terms of section 86(8)(b) the debt counsellor is also obliged to refer the recommendation to the Magistrate’s Court for a hearing under section 87. In Standard Bank of South Africa Ltd v Kruger (unreported case number 45438/09 (GSJ)) and Standard Bank of South Africa Ltd v Pretorius (unreported case number 39057/09 (GSJ)) the court (Kathree-Setiloane AJ)had to interpret section 86(10) of the Act which provides as follows: “If a consumer is in default under a credit agreement that is being reviewed in terms of this section, the credit provider in respect of that credit agreement may give notice to terminate the review in the prescribed manner to – (a) the consumer; (b) the debt counsellor; and (c) the National Credit Regulator, at any time at least 60 business days after the date on which the consumer applied for debt review.” The court had to determine whether the credit provider in casu was entitled to terminate the debt review in terms of section 86(10) and thereafter to proceed with the enforcement of the credit agreements in circumstances where the debt counsellor had referred the debt review matter to the Magistrate’s Court for a hearing in terms of section 87 of the Act. In what follows, the facts and decision in Kruger and Pretorius will be analysed and commented on. In addition, relevant provisions of the Act pertaining to the termination of debt review proceedings and the credit provider’s right to enforce its claim will also be interpreted and commented on. Regarding the credit provider’s right to enforce its claim the position where the debt review process is still pending whilst the matter has not been referred to the Magistrate’s Court for determination yet, will be distinguished from the position where the matter has indeed been referred to the Magistrate’s Court.

A SHORT DISCUSSION ON THE EFFECTS OF THE IN DUPLUM RULE UPON COMMENCEMENT OF LITIGATION AND AFTER JUDGMENT: A VIEW BOTH “INSIDE” AND “OUTSIDE” THE NATIONAL CREDIT ACT

It has repeatedly been confirmed by the courts that the in duplum rule forms part of South African law, and more recently section 103(5) of the National Credit Act 34 of 2005 (hereinafter “the Act”) has concretized the rule into statutory form. This note examines the effects of the in duplum rule once the litigation process has been initiated by the creditor and the implications of the rule after judgment is granted against the debtor. Preceding such discussion, however, one needs first to consider whether South Africa still has a common-law in duplum rule, or whether the statutory in duplum rule has ousted the “old” rule in toto (for ease of reference andpracticality the rule as developed by the courts shall be referred to as the “common law rule” and the rule as set out in s 103(5) of the Act shall be referred to as the “statutory rule”). It is submitted that while the statutory rule has superseded the common law rule in terms of all credit agreements that fall within the jurisdiction or ambit of the Act there are those credit agreements that are not regulated by the Act and it is those credit agreements where the (“old”) common-law rule shall apply and regulate the interest component collectable by the creditor vis-a-vis the debtor. Thus the two rules must now operate together; both rules applying to different sectors of society; at least society whilst it wears its consumer cap. The codified in duplum rule as will be seen below – affects only natural persons and the juristic entity, as defined by the Act, remains to be protected by the common-law rule. Furthermore, the common-law rule will be applicable to those credit agreements which fall outside the auspices of the Act.