S.Africa banks benefit from policy, not poor -SACP

By Peroshni Govender

JOHANNESBURG, 20 Nov (Reuters) - South African commercial banks are benefitting from current monetary policy and high interest rates are "throttling" the poor, the country's communist party chief said on Friday.

The ruling African National Congress is under increasing pressure from its allies in the South African Communist Party and the COSATU trade union federation to introduce economic policies that help the poor.

"The major beneficiaries of the monetary policy in the past have been the banks. They have been making a killing. Yet the very same banks are not investing back," SACP Secretary-General Blade Nzimande told Reuters.

The central bank has cut its repo rate -- at which private sector banks borrow rands from the central bank -- by 5 percentage points to 7.0 percent between December 2008 and August to stimulate an economy that is in its first recession since 1992.

But despite the rate cuts, consumer spending is depressed and credit growth weak as households and company balance sheets remain under stress. Banks have also been criticised for high banking fees.

Nzimande, who is higher education minister in Zuma's cabinet, said in an interview that the SACP was concerned that the country's central bank was perceived to be a private bank with no representation from outside the bank on its interest rate-setting Monetary Policy Committee.

"We are worried that what we call the Reserve Bank is not a state bank, it's a private bank," he said.

"You get all those private people who are sitting in that monetary policy committee with no input from anywhere else either than from amongst themselves -- that's what we have a problem with".