JOHANNESBURG, May 4 (Reuters) - Major South African lender Absa said on Monday it had agreed hundreds of millions of dollars in temporary repayment relief for its borrowers, after the industry said 1.2 million people had applied for help.
The impact of the lockdown on South Africa, a country of over 58 million, mostly poor, people, is expected to be devastating: the economy had already fallen into recession at the end of 2019, and official unemployment was at close to 30%.
Absa, one of four biggest lenders, said more than 376,000 of its account holders had applied for assistance and the bank would deliver 5.8 billion rand of relief, such as repayment breaks or reductions in instalments, over three months.
The Banking Association of South Africa (BASA) said the industry had already implemented more than 15 billion rand ($798.03 million) in temporary repayment help - with roughly half going to individuals and half to businesses.
“The relief measures granted by banks do not envisage debt write-off, but rather leniency in terms of the repayment of loans for a period,” it said at the weekend, urging customers to meet obligations where possible.
Overall, 852,000 of more than 1.2 million people who had applied for banking help had been successful while others were still being assessed, BASA said.
More than 90,000 commercial, small and medium-sized firms had also applied, with 75,000 approved so far.
The vast majority of businesses are still shuttered to some degree more than five weeks into a nationwide lockdown, and the economy is expected to shrink by 5.8% this year.
The relief measures are only available to customers in distress directly as a result of the impact of the coronavirus outbreak and considered in “good standing” by their lender.
This means they need to have been up to date on their payments on Feb. 29, 2020 and have a good track record of paying their debts on time - not the case for many struggling South African consumers and firms.
The government has also announced a 200 billion rand loan guarantee scheme to encourage further lending by banks to virus-hit customers, but the full details have yet to be announced. ($1 = 18.7963 rand) (Reporting by Emma Rumney; editing by Philippa Fletcher)