Half of SA adults 'unbanked'

"This implies," he said, "that in 2006 15.27 million of the adult population was unbanked."

In August, Reuters reported that South Africans tend to opt for non-traditional forms of saving.

According to Old Mutual, non-traditional savings included owning assets such as property "in good areas" and participating in stokvels.

"There's no doubt that a significant portion [of income] goes towards consumer debt, but what we fail to realise is that the large portion goes toward mortgage debts," the executive director of the Old Mutual Investment Group SA, Derrick Msibi, said.

He said non-traditional savings increased from 13% of total adjusted savings in 1996 to 18% in 2006.

Non-traditional savings were beneficial, as key asset prices have boomed over the last four years.

According to Old Mutual SA managing director Paul Hanratty, non-traditional savings in South Africa amounted to around R1trillion.

Parliament was debating the Co-operative Banks bill which was passed without opposition and now goes to the National Council of Provinces for concurrence.

The minister said that the problem of access to financial services is too large to be tackled by commercial banks alone. "Community participation and some government intervention is required," he said.

He told the house that cooperative banks are not a new concept, but the bill formalises an old tradition of institutionalised self help practices, which have been successful in many other countries.

Since 1998 financial services cooperatives, credit unions and village banks have been operating under an exemption from the mainstream Banks Act.

But the implications of the exemption and a lack of specific legislation are that there is a lack of protection for deposits, and an exclusion from 'lender of last resort' facilities. Accordingly, he said, public confidence in these institutions is compromised.

The bill before the house sought to correct this "sub-optimal and temporary regulatory environment by providing for formal regulation and supervision of the banks and establishing a deposit insurance fund. Supporting passage of the bill, Douglas Gibson, who speaks on finance for the Democratic Alliance, said that cooperatives have a long and distinguished history in this country - he cited as examples Old Mutual and Sanlam who were owned by their policy holders until the demutualisation process "I am hoping that some of the co-operative deposit taking institutions that we are providing for today will grow and develop into mighty South African financial institutions within the next few decades," Gibson said. "No one should underestimate the possibilities for growth of these co- operative banks."

- I-Net Bridge