Banks close accounts as last resort - SARB's Naidoo

Cape Town – It is not the aim of banking legislation to close the bank accounts of individuals and businesses, South African Reserve Bank (SARB) deputy governor Kuben Naidoo said on Wednesday.

“The intent of the (Banking) Act is to not close accounts – banks do it as a last resort. The correct approach is for banks to manage risks and if they can’t manage those risks, they close the account. It shouldn’t be standard practice – it’s a last resort.”

Naidoo was responding to questions from the Democratic Alliance’s David Maynier during a discussion following public hearings on transformation in the financial services sector.

During question time, Maynier asked Naidoo if he was concerned that it had taken Absa a considerable amount of time before closing the bank account of Oakbay Investments – a company largely owned by the Gupta family. Maynier also wanted to know if the SARB was investigating the closure of bank accounts, and asked Naidoo to elaborate on the progress of this.

“I won't comment in public on any family regarding the banks," Naidoo said, adding that he was also not in a position to respond to questions on the investigation, as Section 33 of the SARB Act states it would be improper for him to divulge information regarding any specific individual.

“It’s inappropriate for confidentiality reasons as this is a matter between the account holder and the bank. It’s not a matter for the regulator (in this instance the SARB).”

He reiterated though that it is not the intention of a bank to summarily close bank accounts, just on the basis of suspicion.