The National Credit Regulator (NCR) is preparing to audit African Bank’s bad loan book for reckless lending, Lesiba Mashapa, the company secretary of the NCR, told Personal Finance yesterday.

This news follows bad press for the regulator, including revelations in the report by the Myburgh Commission, which investigated the collapse of African Bank, that the NCR’s chief executive refused to respond to the commission’s questions. The questions related to the NCR’s charge in 2012 that the bank had engaged in reckless lending and consequent attempt to fine the bank R300 million.

The Myburgh Commission investigated whether the bank did business recklessly or negligently or with the intent to defraud depositors or creditors. The report states that “the commission did not have the capacity or the time to investigate possible reckless lending by the 513 branches of African Bank”.

Since the bank was put under curatorship, there have been repeated calls for an audit of its loan book to check for reckless lending.

The latest call was made by Geordin Hill-Lewis, a member of Parliament’s Portfolio Committee on Trade and Industry during a debate on whether to introduce a debt amnesty. Hill-Lewis suggested that African Bank borrowers were most in need of debt relief and subsequently asked the South African Reserve Bank (SARB) to give the credit regulator the loan agreements in the bad book so that the regulator could interrogate these for reckless lending. Simultaneously, he called on the regulator to do the necessary investigation. The SARB responded immediately, stating it was up to the credit regulator to decide whether or not to investigate the loans for reckless lending.

This week, Mashapa said the NCR “has always wanted to conduct an audit into African Bank on reckless lending” following the 2012 allegation of reckless lending. But the bank was subsequently placed under curatorship, resulting in further action being limited by the Banks Act, he says.

Mashapa said the NCR had always shared with the SARB information on its African Bank investigations, and it was up to the SARB to pass on that information to the Myburgh Commission. The commission itself was confined by its terms of reference as to what it could ask of the NCR.

He also said the NCR had recommended measures to assist retrenched and over-indebted consumers, including an audit of African Bank’s bad book, to the Portfolio Committee on Trade and Industry last month, before Hill-Lewis’s latest call.

The NCR is now preparing to conduct this audit and hopes to complete it as soon as possible, Mashapa said.