*Update with comment from the NCR 

The South African Reserve Bank (SARB) confirmed in an emailed statement to CNBC Africa that it has referred Capitec to the National Credit Regulator (NCR) over allegations by short-sellers Viceroy of continued use by the bank of multi loan products as it falls outside the central bank’s ambit. Capitec saw its share price tumble almost 4 per cent to close at R853 following the news.

Capitec came under fire earlier this year by Viceroy, which alleged “Capitec is a loan shark with massively understated defaults masquerading as a community microfinance provider”. It called on SARB and the minister of finance to immediately place the bank under curatorship. The report sent the bank’s share price plunging but Capitec has since gone out of its way to rebuff these allegations.

In SARB’s statement sent to CNBC Africa it said “In its update to Parliament on 30 May 2018, the South African Reserve Bank (SARB) reported that there are three main allegations in the Viceroy report. The first two allegations deal with scheduled loans and the provisioning models, both of which are prudential matters, while the third issue deals with the continued use of multi loan products. This third issue is a market conduct issue and falls within the responsibilities of the National Credit Regulator (NCR). The SARB met with the NCR and requested that the regulator take the matter forward.

“Based on the data available to the SARB, Capitec has adequate capital and adequate liquidity. The bank’s capital adequacy ratio of 34% and its liquidity coverage ratio was well over 1 000% compared with the required 100%. In addition, the SARB did not find any indication that rescheduled loans at Capitec were used to hide non-payment and boost new lending. The bank meets all prudential requirements.

“Regulators of financial institutions have the responsibility to investigate various aspects of the activities of these institutions to ensure proper risk management and sound practices are in place”.

The NCR declined to comment on the matter.

In response to an email from CNBC Africa about SARB’s referral of Capitec to the NCR it said it “is unaware of any investigations currently underway against it instructed by SARB as stated in the Bloomberg article. However, we operate in a robust financial services environment where regulators have the mandate and responsibility to carry out various investigations from time to time to maintain a sound financial services industry. Capitec Bank is committed to transparency and is always fully compliant with regulators in such instances.”

Viceroy had a field day over reports of an investigation: