Instruments
of Payment
Important note:
These study notes have been
compiled personally based on the
module outline for the 2023
academic year and are merely a
summary of the work. They may
include additional content or omit
certain information relevant to other
academic years. Additionally,
please be aware that the document
may contain some errors and
spelling mistakes. It is important to
note that these notes are intended
to serve as a supplementary aid for
certain topics and should not
replace the use of textbooks or
other primary study materials.
Students are strongly encouraged
to consult their prescribed
academic sources for accurate and
comprehensive information
regarding the module.
, Learning Unit 1
The roles of banks:
• Functions in the economy by performing roles such as payment and loan
intermediary and provider of payment settlement facility.
• Brings together borrowers and lenders.
• Money is channelled from sectors where it is not being used to sectors where
it is used for productive use.
The role of banks in commerce:
Private Banking
Sector
Commercial Banks Mutual Banks Co-opertive Banks
Co-operative Banks
Banks Act Mutual Banks Act
Act
Banking Sector:
• Banks Act 94 of 1990 (main regulatory legislation).
• Bills of Exchange Act 34 of 1964.
• South African Reserve Bank Act 90 of 1999 (governs reserve bank).
Reserve bank:
• Central bank in SA.
• Acts as regulator of banks and banking business in SA.
• Duty of the office of registrar of banks to regulate banks and banking
business.
,Banking sector supervision & legislation:
• Ensuring prudent financial management by banks.
• Introduces a variety of measurements to protect all consumers.
• Increased provisions of banking services to segment the consumers through
the 2nd and 3rd tiers.
Definition of bank:
• Broad definition:
o A public company registered as a bank in terms of this Act.
• Narrow definition:
o A body of persons, whether incorporated or not, that carries on the
business of banking, and includes the South African Reserve Bank . . .,
a bank as defined in section 1 of the Banks Act . . ., a mutual bank . . .
and the Post Office Savings Bank.
Activities of a bank:
• Taking deposits from general public as a regular feature.
• Advertising for deposits.
• Utilising money deposited.
• Concluding repurchase agreements as a business.
• Any other activities declared by the Registrar of the business of the bank.
Activities excluded from the business of the bank:
• Accepting deposits without advertising or soliciting.
o Provided not holding deposits from 20+ persons or exceeding total of
R500 000 (monetary threshold).
• Co-operative borrowing money from members provided that no loan may be
less than R1000 or repayable within 12 months.
• Activities of public sector/government/other institution or other person
designated by Registrar provided it is performed its conditions imposed
• Activities of institutions registered by Acts of Parliament.
• A money lending transaction concluded by agent of lender with the bank as
borrower.
• A money lending transaction concluded between mandator and a bank.
, Banks Act does not apply to:
• The South African Reserve Bank (SARB)
• The Land Bank
• The Development Bank of Southern Africa
• The Corporation for Public Deposits
• The Public Investment Commissioners
• Any mutual bank
• Any co-operative bank
• Any other person or body as designated by the Minister by notice in the
Government Gazette.
Definition of deposit:
• An amount of money paid by one person to another person subject to an
agreement that:
o An equal amount or any part thereof will be:
▪ Conditionally or unconditionally repaid.
▪ Either by the person who received money or by any other
person.
▪ With/without a premium.
▪ On demand or at specified/unspecified dates.
▪ Or in circumstances agreed to by the person making the
payment and the person receiving it
o No interest will be payable OR interest will be payable at specified
intervals.
Exclusions from a deposit:
• Any advance/part payment in respect of contract of sale, lease/hire of
movable/immovable property.
• Amount paid as security for performance / loss due to non-performance of
contract.
• Amount paid as security for delivery/return of movable/immovable property.
• Any amounts paid by holding company to subsidiary or vice versa or between
subsidiaries.
• Any amounts paid by close relatives, directors or executive officers.
• Premiums paid in terms of long-term insurance policy.
• Pension fund (registered) contributions paid.
• Contributions paid by members of a benefit fund.
• Premiums paid in terms of policy under Short Term Insurance Act.
of Payment
Important note:
These study notes have been
compiled personally based on the
module outline for the 2023
academic year and are merely a
summary of the work. They may
include additional content or omit
certain information relevant to other
academic years. Additionally,
please be aware that the document
may contain some errors and
spelling mistakes. It is important to
note that these notes are intended
to serve as a supplementary aid for
certain topics and should not
replace the use of textbooks or
other primary study materials.
Students are strongly encouraged
to consult their prescribed
academic sources for accurate and
comprehensive information
regarding the module.
, Learning Unit 1
The roles of banks:
• Functions in the economy by performing roles such as payment and loan
intermediary and provider of payment settlement facility.
• Brings together borrowers and lenders.
• Money is channelled from sectors where it is not being used to sectors where
it is used for productive use.
The role of banks in commerce:
Private Banking
Sector
Commercial Banks Mutual Banks Co-opertive Banks
Co-operative Banks
Banks Act Mutual Banks Act
Act
Banking Sector:
• Banks Act 94 of 1990 (main regulatory legislation).
• Bills of Exchange Act 34 of 1964.
• South African Reserve Bank Act 90 of 1999 (governs reserve bank).
Reserve bank:
• Central bank in SA.
• Acts as regulator of banks and banking business in SA.
• Duty of the office of registrar of banks to regulate banks and banking
business.
,Banking sector supervision & legislation:
• Ensuring prudent financial management by banks.
• Introduces a variety of measurements to protect all consumers.
• Increased provisions of banking services to segment the consumers through
the 2nd and 3rd tiers.
Definition of bank:
• Broad definition:
o A public company registered as a bank in terms of this Act.
• Narrow definition:
o A body of persons, whether incorporated or not, that carries on the
business of banking, and includes the South African Reserve Bank . . .,
a bank as defined in section 1 of the Banks Act . . ., a mutual bank . . .
and the Post Office Savings Bank.
Activities of a bank:
• Taking deposits from general public as a regular feature.
• Advertising for deposits.
• Utilising money deposited.
• Concluding repurchase agreements as a business.
• Any other activities declared by the Registrar of the business of the bank.
Activities excluded from the business of the bank:
• Accepting deposits without advertising or soliciting.
o Provided not holding deposits from 20+ persons or exceeding total of
R500 000 (monetary threshold).
• Co-operative borrowing money from members provided that no loan may be
less than R1000 or repayable within 12 months.
• Activities of public sector/government/other institution or other person
designated by Registrar provided it is performed its conditions imposed
• Activities of institutions registered by Acts of Parliament.
• A money lending transaction concluded by agent of lender with the bank as
borrower.
• A money lending transaction concluded between mandator and a bank.
, Banks Act does not apply to:
• The South African Reserve Bank (SARB)
• The Land Bank
• The Development Bank of Southern Africa
• The Corporation for Public Deposits
• The Public Investment Commissioners
• Any mutual bank
• Any co-operative bank
• Any other person or body as designated by the Minister by notice in the
Government Gazette.
Definition of deposit:
• An amount of money paid by one person to another person subject to an
agreement that:
o An equal amount or any part thereof will be:
▪ Conditionally or unconditionally repaid.
▪ Either by the person who received money or by any other
person.
▪ With/without a premium.
▪ On demand or at specified/unspecified dates.
▪ Or in circumstances agreed to by the person making the
payment and the person receiving it
o No interest will be payable OR interest will be payable at specified
intervals.
Exclusions from a deposit:
• Any advance/part payment in respect of contract of sale, lease/hire of
movable/immovable property.
• Amount paid as security for performance / loss due to non-performance of
contract.
• Amount paid as security for delivery/return of movable/immovable property.
• Any amounts paid by holding company to subsidiary or vice versa or between
subsidiaries.
• Any amounts paid by close relatives, directors or executive officers.
• Premiums paid in terms of long-term insurance policy.
• Pension fund (registered) contributions paid.
• Contributions paid by members of a benefit fund.
• Premiums paid in terms of policy under Short Term Insurance Act.
