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South African Reserve Bank

Inward loans 

  • What is an inward foreign loan?

    An inward foreign loan is when money is borrowed from abroad.
  • Who can borrow abroad?

    Any resident can borrow money abroad from a non-resident provided the loan falls within exchange control policy (see question above).
  • How must I apply for an inward foreign loan?

    You must approach your South African bankers and provide them with full details of the loan.
  • What is a base interest rate?

    The base rate is the prime lending rate that the banks lend out to the public.
  • What specific criteria must be adhered to in order to obtain approval for an inward foreign loan?

    (i) The term of the loan must be at least one month.
    (ii) The interest rate in respect of third party foreign denominated loans may not exceed base lending rate plus 2% and in respect of shareholders’ loans the base lending rate of the country of denomination.
    (iii) Interest rate in respect of Rand denominated loans may not exceed prime lending rate plus 3% on third party loans or the base rate, in the case of shareholders’ loans.
    (iv) In respect of trade finance facility loans, interest payments of up to prime plus 10%, which includes shipping and confirming fees, handling costs, administration fees, bank charges, commissions and raising fees (all-in costs) will be approved.
    (v) The loan funds to be introduced may not be sourced from a South African resident's foreign capital allowance, foreign earnings retained abroad, funds for which amnesty had been granted and/or foreign inheritances.
    (vi) There may not be any direct/indirect South African interest in the foreign lender.
    (vii) The loan funds may not be invested in Sinking Funds.
    (viii) No upfront payment of commitment fees, raising fees and/or any other administration fees are payable by the borrower.
  • What is a trade finance facility?

    A facility for a period not exceeding 12 months for financing current imports or exports. Such facilities are normally used by South African residents when the overall effective covered cost of the facility is lower than that of local short term Rand finance.
  • In what time period must the principal amount be introduced?

    The principal amount of the loan must be introduced within a period of 12 months from the date of approval. Any extensions in this regard must be advised to your bank. 
  • How can the inward loan be repaid?

    Foreign loans can only be repaid up to the amount that has been received in South Africa and the repayment can be done through the banks in South Africa.
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