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Johannesburg - The National Credit Regulator (NCR) has referred small lender Ubank to a consumer tribunal, recommending it should be fined for reckless lending and forced to change its business practices.
The move comes just months after African Bank Investments had to be rescued by the Reserve Bank following reckless lending practices.
READ: Rescue plan for African Bank
The NCR said on Wednesday it was referring Ubank to the National Consumer Tribunal, which has the power to impose fines and force companies to change their ways.
The NCR said Ubank had, among other contraventions, granted credit to customers who were already behind on other debt repayments and had also failed to disclose interest rates on credit agreements.
"The NCR has requested the imposition of an administrative fine and corrective measures to be taken by Ubank to provide redress to the affected consumers," it said in a statement.
Ubank had no immediate comment.
In 2013, the NCR accused African Bank - which targeted millions of low-income South Africans with easily available, but expensive loans - with reckless lending.
It sought a R300m fine against the lender after finding hundreds of loans to consumers with no or inadequate means to repay. However, it accepted a settlement of R20m, citing African Bank's cooperation in the case.
In 2014, Ubank's CEO told Reuters that a protracted strike in the mining sector had hurt the ability of many of its customers, most of whom work in the industry, to repay their loans.
About 80% of Ubank's R1bn loan book was to gold and platinum miners, CEO Luthando Vutula said in April.
ALSO READ: Why African Bank was a 'perfect storm'
