Can South African Banks Legally Deduct From Social Grants?
There are about 17 million South Africans that rely on social grants, which is about 30% of the country’s population. This may seem like small news, but it is actually a huge and important legal issue.
The South African Social Security Agency, who administers social grants, has laid criminal charges against Grindrod Bank.
These charges came after a series of complaints of grantees that were reporting debit orders and bank charges were being deducted from grant funds that were being deposited in their accounts.
About 4% of the annual gross domestic product of South Africa is spent on social grants.
The South African Social Security Agency administers different types of grants, which include those for older people, children, war veterans and disabled persons.
Grant payments are sometimes contracted through third parties like Cash Paymaster Services that use the banking services offered by Grindrod Bank.
The South African Social Security Agency contacted this contractor and told them that they have to stop the deductions on grants. Cash Paymaster Services referred this matter to Grindrod. The bank has said that they are not able to help the South African Social Security Agency. The matter could now be taken to court.
The agency has said that the regulations issued in terms of the Social Assistance Act do not allow authorization of debit orders on social grants once the money has been deposited into the bank account.