Trade ministry warns businesses

The Ministry of Trade and Industry has warned banks and other credit providers not adhering to regulations under the Credit Agreement Act of 1980, that they risk being penalised.
The regulations contained under the Credit Agreement Act of 1980 prescribes the deposit that should be paid in cash by clients before a hire purchase agreement or loan is granted as well as the period in which a loan is to be repaid.
In a notice released earlier this week, the ministry said it had noted with concern that banks and other credit providers are not complying with these requirements.
“For example, where regulations prescribe that a deposit for a motor vehicle requires 10% of the purchase price and the loan to be repaid within 54 months from date of delivery, they are offering credit without a deposit and extend the repayment period to 60 months. This normally leads to over-indebtedness and irresponsible borrowing by consumer,” the notice by the trade ministry said.