The row was sparked when Housing Minister Lindiwe Sisulu yesterday lashed out at the banking sector during a parliamentary media briefing.

“I wish the banks could be here to speak for themselves. But from my side I’m very concerned about the pace of negotiations,” she said.

Government has been negotiating with SA’s banks and civil society organisations to speed up housing provision for the poor, which the banks committed to last year as part of the financial sector charter.

The negotiations have deadlocked over the banks’ demands for financial guarantees to underwrite their risk in lending to potential homeowners in the R2500-R7000 monthly income bracket.

Sisulu said that while government was open to providing some financial guarantees, it sought to share the risk equally with the lending institutions.

Sisulu would not reveal the figures over which her department and the banks were haggling because of the sensitivity of the negotiations. However, banks had already lent R6bn of the promised funds to the upper end of the targeted income bracket, she said.

But Banking Association MD Cas Coovadia shifted the blame for the delays back to Sisulu.

“I could express the same level of frustration because the banking industry has done substantial work and government has not come to the party.”

At issue between government and the banks is who should carry most of the risk attached to lending to lower-income earners, a market the banks have spurned — or redlined — until pressure from government and political and community groups resulted in the signing of the Financial Sector Charter last year.

Some of the social players involved in the negotiations have accused both government and the banks of trying to conclude a bilateral agreement and cutting out the groups that led the campaign against redlining.

But Coovadia said government and the banking association were the two main protagonists and their co-operation would be required to get the process moving. Social partners should have only a “monitoring” role, he said.

“If we are serious about transforming the low-income housing market there must be a genuine partnership, and that means we have to share the risk,” he said.