Johannesburg - Unsecured lending in South Africa is growing too fast, Reserve Bank deputy governor Lesetja Kganyago
said on Tuesday, in the latest sign policy makers are worried about rising levels of borrowing by highly indebted households.
Recent data has pointed to local banks increasingly giving out loans without security to consumers already struggling to pay their bills.
“As a regulator we are concerned about the growth in unsecured lending. It is growing and it is growing too fast,” Kganyago told a forum on the impact of the eurozone crisis on Africa.
A day earlier, Finance Minister Pravin Gordhan
also noted the significant growth in the loans, saying it would be a big worry if it was feeding solely into consumption as this would fuel inflation.
Until recently, unsecured lending - which is riskier for banks and thus more expensive for borrowers - was dominated by smaller lenders, but now the bigger banks also looking for a slice of the high-margin business.
The rand value of unsecured credit granted increased was up more than 57% in the last quarter of 2011 compared with the same period the previous year, the latest official data shows.
Kganyago also said the economy remains vulnerable to the downturn in Europe, a major trading partner for South Africa.