Picture: FREDDY MAVUNDA
Picture: FREDDY MAVUNDA

Tempers flared in parliament this week when the DA's Dean Macpherson was prevented from questioning a Reserve Bank official about the bank deriving benefit from the interest and fees paid by African Bank borrowers who were granted credit recklessly.

The Reserve Bank owns African Bank's bad loan book, 40% of which is believed to have been granted recklessly, according to Macpherson.

Janet Terblanche, the divisional head of policy, statistics and the industry support department at the Reserve Bank, was presenting to parliament the central bank's comments on the possible impact of the proposed debt relief bill.

While the Reserve Bank generally supports the initiative to provide relief to overindebted poor South Africans, Terblanche said it felt strongly that the enforcement of the law dealing with reckless lending needed to be supported "more strongly" and that the role of debt counselling needed to be taken into account.

During question time, Macpherson said the issue of overindebted African Bank debtors paying back the Reserve Bank needed to be discussed and that it was "a disgrace" that the audit of the bank's bad loan book had yet to be completed. "Why not suspend those credit agreements until the audit is complete?" he asked.

But the chairwoman of the committee, Joan Fubbs, ruled Macpherson's question out of order. The central bank had been invited to address the committee on the subject of the bill. If the bank needed to answer to parliament on the topic of reckless lending, it would be called on to do so, she said.

She agreed that the issue of reckless lending by African Bank could not be ignored, "and must go back to the SARB".

It has been more than a year since the National Credit Regulator appointed audit and accounting firm Nexia SAB&T to audit African Bank's bad loan book for reckless lending.

Last October, when the auditors were engaged by the NCR to look at a sample of African Bank credit agreements, the regulator said the audit would be done by year-end. The auditors have yet to file their report. The regulator had subsequently asked the auditors to interrogate all 1.5million credit agreements, Obed Tongwane, deputy CEO of the NCR, said this week.

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