Special bank account for low income earners

Special bank account for low income earners

MASERU – THE Bankers Association of Lesotho (BAL) says its members will launch a special savings account for low income earners in the second quarter of this year. The “Bothebelele account”, as it is known, will be available at Standard Lesotho Bank, Nedbank Lesotho, Lesotho Post Bank and FNB Lesotho which are the only members of the BAL.

Standard Lesotho Bank CEO Mpho Vumbukani, who is the chairman of BAL, said Bothebelele shows banks are committed to financial inclusion.
He said Bothebelele will make it easy and cheaper for people who earn below M3000 to access as it does not have management and cross border deposit fees. The account will be for basic banking transactions like savings, withdrawals and deposits.
“Each of the banks will still have in their menu, other products that drive financial inclusion. The low income savings account will form part of the bank’s products,” Vumbukani said.

The account does not have other services like loans, overdrafts and online banking.
Vumbukani said banks will not charge clients to open or maintain the Bothebelele account.
That it does not have monthly charges should come as a relief to customers who have been crying about service fees for years.

A 2016 working paper published by the Central Bank of Lesotho (CBL) says about 38 percent of the adult population has a bank account.
This shows that the majority of the adult population still lacks access to basic financial services, the paper said.
“The mainstream banking sector fails to deliver financial services to millions of consumers especially those residing in rural areas. Banks are biased in favour of affluent consumers due to high costs of physical infrastructure and operational costs as well as low profits associated with serving the low income consumers.”

“This lack of access to financial services not only limits the ability of the poor to save, repay debts and manage risk responsibly but also indirectly exposes them to poverty.”
The Bothebelele account seems to the banking sector’s answer to that criticism.
Meanwhile the BAL has issued a final notice for clients to verify their accounts as part of the Know-You-Client (KYC) campaign which has been going on for the past few years.

All local banks are required by the law to keep updated personal records of customers.
Maintenance of clear and up-to-date documents is one of the main things the CBL looks at when assessing a bank’s compliance with the licensing regulations.

Clients who have not updated their information in the last 12 months are therefore requested to take the relevant documents to the nearest branch before March 28.

Failure to do so will result in their accounts being blocked. Vumbukani said the campaign started in 2015.
“Banks have been sending out messages to clients requesting them to update their banking documents, both personal and company records,” Vumbukani said.

“Despite numerous reminders including the re-verification campaign that was launched in September 2016, compliance level is low.”
“This matter has now caught the banks in a precarious situation because the banks are caught in the middle of serving the requirements of their regulatory framework as prescribed by the Central Bank of Lesotho as well as ensuring that customers are granted services.”
He said clients should treat this matter as urgent if they want their accounts to remain active.

KYC is a legal requirement because governments have put this as a control and monitoring instrument towards combating money laundering and financing of terrorism; both are global concerns.  Although terrorism may not be a problem for Basotho yet, the issue is that Lesotho has to be prepared like other countries.

Vumbukani said the KYC would ensure that Lesotho does not become a launching pad for international terrorism and money laundering.
He said Lesotho has ratified the international convention that seeks to combat economic crimes so these laws are binding for BAL and the country at large.

Tokase Mphutlane

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