“The National Credit Regulator has for some time engaged African Bank due to concerns about their lending practices and their impact on consumers,” Nomsa Motshegare, CEO of the National Credit Regulator (NCR), said in a statement.
African Bank Limited is a subsidiary of [DATA ABL:African Bank Investments Limited], a major player in South Africa’s unsecured lending industry. African Bank recently announced that it would be expecting a headline loss of at least 6.4 billion rand for the 2014 financial year.
The bank has since been placed by the South African Reserve Bank (SARB) under curatorship as a means of providing a support structure for the bank part of the firm.
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Last year, the NCR investigated African Bank for reckless lending, and thereafter entered into a settlement agreement which saw the bank pay 20 million rand.
Motshegare added that the NCR had been additionally concerned about the growth in unsecured lending especially in an environment where numerous consumers had impaired credit records.
“African Bank’s recent growth in impairments and bad debts went a lot further than expected. Consumer over-indebtedness is not only caused by reckless lending and borrowing, but also micro and macro-economic factors that have a direct impact on the debt repayment capacity of consumers, some of which occur after the granting of credit,” Motshegare explained.
“The NCR has been and continues to work closely with the SARB in ensuring sound and fair lending practices across the full spectrum of banks providing credit.”
Motshegare added that African Bank, according to the SARB, will however continue its business transactions and continue lending to its customers.
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“The NCR will engage the curator of African Bank in an effort to ensure that the bank continues to serve its clients in a manner which is fair and equitable in terms of the National Credit Act.”