The National Credit Regulator reached a settlement agreement with African Bank. (Gallo)
The National Credit Regulator (NCR) on Friday said it reached a settlement agreement with African Bank, which will see the unsecured lender pay R20-million as a penalty.
The agreement relates to two cases referred to the National Consumer Tribunal early this year by the credit regulator that accused the bank of reckless lending.
"In terms of the settlement agreement, African Bank has agreed to pay an amount of R20-million into the National Revenue Fund, write off the loans, refund consumers, rescind judgments taken against consumers, remove judgment and adverse information listings from the credit records of consumers, and develop an active engagement process with the NCR," the regulator said in a press release.
Accusations of reckless lending began when it came to light that there had been a breach of the bank's internal rules when granting loans at its Dundee branch.
Negotiations
When referring the case to the tribunal, the NCR recommended a R300-million fine be imposed on the bank although the capital value of these loans was estimated to be worth just over R15-million.
The bank's shares rose on the back of the news in trading on Thursday.
The NCR said it would like to thank African Bank for its co-operation and the constructive manner in which the negotiations to settle these matters were conducted.