Financial inclusion, regulation, and access to basic bank accounts in South Africa

Abstract

This research analyses the current policy and regulatory framework in South Africa to establish whether or not it is effective and responsive in promoting financial inclusion and facilitating access to basic bank accounts for the poor and the low-income households. The research takes a “back to basics” approach and focuses on access to basic bank accounts as the simplist form of financial service provided by banks and a gateway to other financial services. The main objective of the study is to determine whether the regulatory framework in South Africa that applies to commercial banks as deposit-taking institutions imposes obligations on them to provide access to basic bank accounts for consumers. The study applies Ayres and Braithwaite’s theory of responsive regulation and the pyramid of regulatory strategies to determine the type of regulatory instruments that may be applied to promote financial inclusion and access to basic bank accounts, and whether the current regulatory framework in South Africa should be redeveloped and improved to make it more effective and responsive to achieving this objective. The study uses existing regulatory frameworks for financial inclusion and access to basic bank accounts adopted by global standard-setting bodies, continental bodies, national legislatures, and associations of banks to benchmark the forms of regulatory responses and to determine whether these responses are responsive and effective in promoting financial inclusion generally, and access to basic bank accounts in particular. It further discusses the role that various regulatory bodies play through mutual collaboration and coordination to enforce and promote compliance with measures that promote financial inclusion and access to basic bank accounts. This research makes a number of findings and identifies gaps in the current policy and regulatory framework in South Africa. It, therefore, makes specific recommendations for improving and developing policy and regulatory measures to promote financial inclusion with a specific focus on access to basic bank accounts.