Banks promise not to evict orphans of HIV/AIDS

Banks had agreed to allow orphans of HIV/AIDS to stay in houses even if they did not have the money to pay the outstanding bonds, said Bob Tucker, the Chief Executive of the Banking Council.

Apart from the humanitarian issues around throwing destitute children out on the street, there was a "huge reputational risk": homeowners seeing such heartlessness would be more inclined to stop paying their bonds if they were angry with their banks.

Tucker said the banks would also not base their lending decisions on applicants' HIV/AIDS status, saying: "In the future, if the applicant has an income stream and security, (their) HIV/AIDS status should not impact on the lending decision". This is in line with the agreement reached at the Nedlac-sponsored financial sector summit, concluded last week.

Banks also agreed to stop red-lining areas, except those that were clearly dysfunctional, and to take steps towards giving the poor better access to basic financial services. But Tucker stressed that although banks were willing to take "some pain" to ensure that the sector treated the poor and vulnerable more fairly, any steps would have to be taken in conjunction with other players - the government and life assurers. "Good progress" was being made in spreading the risks.

A crucial aspect of the relationship between banks and their HIV-positive clients would be access to treatment. This not only improved the quality of life of the people living with the HI virus, but also went a long way to mitigating risks by extending the working lives of those afflicted. Tucker said the Council was looking at how to "trigger the energy of the private sector to make sure people are treated".

The Life Offices Association has suggested compulsory life insurance for all homeowners. Applicants for policies for less than R150 000 would not need to undergo a medical examination. Analysts have said the proposal was very neat, but it did raise the question of moral hazard. People who knew they were HIV-positive would be able to acquire, via the banks, assets that they knew would be paid off after their death.