A stokvel is typically excluded from the Banks Act for several reasons:
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Definition and Purpose: Stokvels are informal savings or investment groups formed primarily for social, cultural, or community solidarity purposes, rather than for conducting commercial banking activities. They aim to help members save money and provide mutual financial support, which distinguishes them from formal banking institutions.
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Lack of Profit Motive: Unlike banks, which operate to make a profit and are subject to strict regulations regarding capital adequacy and risk management, stokvels generally operate on a non-profit basis. Their primary objective is to benefit members rather than to engage in commercial banking practices.
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Regulatory Framework: The Banks Act is designed to regulate formal banking institutions that accept deposits from the public and offer financial services under specific legal and prudential standards. Stokvels operate outside of this framework because they do not engage in banking operations. Their structure often does not support the compliance measures required by the Act.
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Risk and Member Control: Stokvels are usually managed by their members, who have direct control over funds and decision-making processes. This grassroots management style contrasts with the centralized and regulated approach required for banking entities, which necessitates protections for depositors and the financial system.
These factors contribute to the exclusion of stokvels from the Banks Act, allowing them to function as community-based savings vehicles without the stringent regulations that govern formal banking institutions.
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