Loans holiday relief applications hit 377 875…. Value of loans approved under moratorium is N$5.8 billion…. Ministry of Justice planning amendment to restrict sale of property

Chamwe Kaira

The Bank of Namibia has disclosed that as of 30 April 2023, commercial banks received a total of 377 875 applications for holiday relief since a rollout in April 2020 to provide relief on property loans that were hard hit by the Covid 19 pandemic. Of this amount, 370 816 applications were approved.

Kazembire Zemburuka, Director of Strategic Communications and International Relations told Observer Money that the banking industry is aware of the concerns raised regarding repossessions of houses and other property.

He said it is for this reason; commercial banks continue to implement the measures instituted by the Bank of Namibia.

“To further support the economic recovery underway, the bank decided to continue with some of the measures instituted to cushion households and businesses from the worst impacts of COVID-19 pandemic and its related restrictions on economic activities. The new measures provided for in Determination BID-33 came into effect on 2 April 2023, and are valid until 1 April 2024. Banking institutions are required to provide relief in a fair and transparent manner to distressed, qualifying clients.”

Zemburuka noted that individuals largely benefited from relief measures as they stood at 228 887 approved reliefs followed by real estate and business services and trade and accommodation.

“The industry’s value of loans approved under the moratorium stood at N$5.8 billion. At the beginning of the pandemic the non-performing loans ratio stood at 5.2% (March 2020) and peaked at 6.9% (September 2020), after which it gradually decreased to a level of 5.7% (March 2023) due to write-offs, debt restructuring, and other recovery options implemented by banks,” said Zemburuka.

The central bank confirmed that it has received a letter from Metcalfe Beukes Attorneys on home loan defaults.

“The letter is receiving the Bank’s attention and as standard practice; a response will be addressed to the authors of the letter,” Zemburuka said.

Metcalfe Beukes Attorneys wrote to the central bank asking it to intervene in how commercial banks deal with defaulting home loan holders.

The law firm said in its letter that commercial banks are economically enslaving defaulters and ignoring relief measures provided for by the Bank of Namibia. The firm said homeowners are forced to default due to economic circumstances such as the COVID-19 pandemic. Metcalfe said even though the High Court has gone out of its way to be merciful, there is just no way around commercial banks that are able to afford astronomical legal fees.

Zemburuka said non-performing loans and foreclosures worry the bank because they could jeopardise financial stability.

“Nevertheless, foreclosure is a legal process in which a lending institution, such as a bank, seizes collateral used as surety for a loan advanced to a defaulting borrower. The lending institution issues a letter of demand, a default judgement and writ of execution are obtained in the High Court, and the Sherriff of Court seizes and sells a borrower’s home or property after the borrower fails to honour his/her loan repayment obligation for a certain period.”

According to Namibian civil and contractual law, if a banking institution has non-performing loans on its books, it may take the necessary legal action to enforce the recovery of the owed loans, he said.

Zemburuka said the bank welcomes any interventions from the Ministry of Justice and any other stakeholder, as foreclosures are the result of a proper legal process in which the Courts have the final say.

He said given the involvement of courts, such matters cannot be interfered with by the central bank as a regulator and supervisory authority, as any interference would amount to the bank being in contempt of a court order or the bank being liable for interfering or defeating the course of justice.

Zemburuka said the bank is aware of the proposed reforms by the Ministry of Justice regarding the amendment of the High Court Act, 1990 (Act No. 16 of 1990) to provide for the restriction on sale in execution of immovable property. The bank will provide input to this important process when called to do so, he said.

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