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Cape Town - African Bank Investments [JSE:ABL] agreed to a fine of R20m relating to a probe about reckless lending, the bank announced on Thursday.
"African Bank has agreed to pay a settlement amount of R20m to the National Revenue Fund," it said in a SENS report.
The National Credit Regulator (NCR) referred the case in February to the National Consumer Tribunal (NCT).
It called for a fine of R300m to be imposed on African Bank and was also the first time it referred a bank to the NCT.
The NCR also wanted the branch responsible for issuing hundreds of reckless loans to be suspended from granting credit for 1 year.
"The NCR and African Bank have, through a process of mutual cooperation, resolved these matters to the mutual satisfaction of both parties," the bank said.
The bank targets millions of low-income South Africans through loans and furniture, which it sells on credit.
Abil is largest provider of unsecured loans in the country.
Unsecured loans, which are not backed by collateral and therefore riskier, are more lucrative for banks.
The bank said in September that its full-year profit was likely to fall by as much as 63%. It said it was hit by rising bad debts from its heavily leveraged customers and a loss at its furniture unit.
In August, the lender said it would sell its retail furniture business and raise up to R4bn through a rights offering to bolster its balance sheet, Reuters reported.
Speaking to Fin24 in an interview in May, Abil chief financial officer Nithia Nalliah, said that customers don't say no to credit.
Nalliah was responding to Fin24 regarding African Bank's bad debt charges.
It is virtually impossible for Abil to do anything if customers who have loans with the bank accept further credit from other lenders, he said at the time.
"African Bank has agreed to pay a settlement amount of R20m to the National Revenue Fund," it said in a SENS report.
The National Credit Regulator (NCR) referred the case in February to the National Consumer Tribunal (NCT).
It called for a fine of R300m to be imposed on African Bank and was also the first time it referred a bank to the NCT.
The NCR also wanted the branch responsible for issuing hundreds of reckless loans to be suspended from granting credit for 1 year.
"The NCR and African Bank have, through a process of mutual cooperation, resolved these matters to the mutual satisfaction of both parties," the bank said.
The bank targets millions of low-income South Africans through loans and furniture, which it sells on credit.
Abil is largest provider of unsecured loans in the country.
Unsecured loans, which are not backed by collateral and therefore riskier, are more lucrative for banks.
The bank said in September that its full-year profit was likely to fall by as much as 63%. It said it was hit by rising bad debts from its heavily leveraged customers and a loss at its furniture unit.
In August, the lender said it would sell its retail furniture business and raise up to R4bn through a rights offering to bolster its balance sheet, Reuters reported.
Speaking to Fin24 in an interview in May, Abil chief financial officer Nithia Nalliah, said that customers don't say no to credit.
Nalliah was responding to Fin24 regarding African Bank's bad debt charges.
It is virtually impossible for Abil to do anything if customers who have loans with the bank accept further credit from other lenders, he said at the time.
Watch the full interview
- Fin24 with agencies
