LU1 - THEME 3

INPA Instruments of Payment Law Learning Unit 1: Theme 3

The SARB operates with a unique shareholding structure aimed primarily at benefiting taxpayers.
Approximately 800 private shareholders own SARB shares, with each individual allowed to own a maximum of 10,000 shares.
The SARB is committed to transparency and efficiency in its financial dealings, distributing 90% of its profits to the South African government. However, it places a cap on shareholder dividends, allowing a maximum distribution of R200,000 annually to each shareholder.

Vision: Enhance the economic well-being of South Africans by ensuring price and financial stability that fosters growth.
Mission: Vigilantly protect the value of the national currency, facilitate balanced economic frameworks, and stimulate sustainable growth across sectors of the economy.
Values: Uphold accountability, strive for excellence in operations and practices, maintain integrity in all dealings, reinforce respect and trust among stakeholders, and promote open communication within and outside the institution.

The SARB functions as the principal regulator of the banking sector, overseeing the issuance of bank licenses. This includes rigorous monitoring of banking activities to ensure compliance with established financial practices.
SARB is also tasked with the establishment, conduct, and supervision of payment, clearing, and settlement systems, crucial for robust financial interactions.

SARB operates under the National Payment System Act, which provides the authority to monitor and supervise financial markets, ensuring that they are fair and efficient.
The constitution under sections 223, 224, and 225 establishes SARB as the central bank, emphasizing its independence and its obligation to consult regularly with the Cabinet on critical financial matters, fostering a collaborative governance structure.

Bank Supervision Department: Dedicated to ensuring an effective regulatory framework for the banking system, focusing on safeguarding depositors and bolstering economic stability.
National Payment System Department: Accountable for ensuring the soundness and safety of the national payment system through the implementation of rigorous risk reduction measures, thereby enhancing consumer confidence.

Banks Act: Designed to shield the public from insolvency risks and to combat unfair practices within the banking sector, helping to stabilize public confidence in financial institutions.
National Payment System Act: Core regulations guiding the operations of payment systems, vital for ensuring secure and efficient transaction processes.
Consumer Protection Act: Aims to not only protect vulnerable consumers but also enhances access to banking services, ensuring fair treatment across all banking interactions.
Financial Advisory and Intermediary Services Act: Governs financial advisory services, establishing a framework for accountability and standards in the financial advisory sector.
POCA (Prevention of Organised Crime Act): Framework aimed at combating money laundering and criminal activity within financial systems.
FICA (Financial Intelligence Centre Act): Sets forth norms and guidelines for financial institutions to mitigate risks associated with money laundering and financing of terrorism, promoting compliance and ethical practices within financial operations.

Definition of a Bank: Public companies recognized under the Companies Act that accept public deposits and provide banking services such as accepting, safeguarding, and transferring funds.
Exclusions from Bank Definition: Notably, the South African Reserve Bank, Land Bank, Development Bank of Southern Africa, and other designated entities are excluded from this definition.

Purpose: The Banks Act aims primarily to protect the public from potential losses arising from bank insolvencies while promoting fair competition in the banking sector.
Registration Requirement: All banks must be duly registered as public companies under the Banks Act to conduct banking operations legally. Non-compliance can lead to stringent penalties, including fines and possible incarceration.

Banks are required to maintain customer accounts, honor payment requests promptly, collect payments on behalf of customers, and ensure timely provision of account statements.
Additionally, banks must honor drafts, loans, and payments without undue delay to foster trust.

Banks must exercise reasonable care and skill while providing banking services, ensuring customer confidentiality through a duty of secrecy, and acting in good faith to maintain mutual trust.

Customers are responsible for notifying banks of any known or suspected fraudulent activities or forgeries, ensure reimbursement for expenses related to transactions as outlined in agreements, and adhere to fee and interest payments as per the agreement.
Customers should exercise reasonable care when issuing payment instructions to prevent facilitating fraud, reinforcing security in banking transactions.

The relationship between a bank and its customer can be dissolved due to various factors including the death of the customer, insanity, or sequestration as stipulated in the account agreement terms. This ensures that the bank operates according to the legal framework governing such relationships.