ABSA Bank was unaware that a Port Elizabeth court had found it guilty of reckless lending, until it was contacted by a newspaper last week, a spokesman said on Friday.
ABSA Bank was unaware that a Port Elizabeth court had found it guilty of reckless lending, until it was contacted by a newspaper last week, a spokesman said on Friday.
Patrick Wadula, Absa's head of media relations, said the bank only became aware of a case in which a pensioner was granted a R350000 bond and couldn't repay it when contacted by Sowetan's sister newspaper, the Port Elizabeth-based Herald.
It was then that Absa started investigating how an 81-year-old pensioner was given a bond when the instalments were more than his monthly income.
Gaenor de Kock, a debt counsellor at Debt Smart in Port Elizabeth, told Sowetan yesterday that the pensioner, who did not want to be named, got the home loan for his daughter from Absa in September 2007. The daughter signed surety, which is allowed by the National Credit Act.
The pensioner's monthly income was R3700 and after taking into account living expenses, including food, electricity and petrol, he was only left with R1305 with which to service any other debt.
His last payment was in October and when the arrears continued to mount, the man received a Section 29 letter from Absa in accordance with the NCA.
One of the options that Section 29 of the Act gives debtors is to consult a debt counsellor for help. At the point when the pensioner approached Debt Smart the bank was threatening to repossess his house.
De Kock said: "He came to us in February and we took on his case. We went through all the paperwork and found his application forms at Absa show his income and expenses. It should have been clear to the loan officer that this man could not afford to service the loan."
Together with Pierre Kitching Attorneys, Debt Smart took the pensioner's case to the Port Elizabeth magistrate's court, where a judge ruled last week that Absa was guilty of reckless lending.
The judge further ruled that the bank must write off the full R374000 debt, which was capital plus interest on arrears.
The bank's deputy chief executive Louis von Zeuner told wire news service Bloomberg that the bank may appeal the charge.
absa found guilty of reckless lending
ABSA Bank was unaware that a Port Elizabeth court had found it guilty of reckless lending, until it was contacted by a newspaper last week, a spokesman said on Friday.
ABSA Bank was unaware that a Port Elizabeth court had found it guilty of reckless lending, until it was contacted by a newspaper last week, a spokesman said on Friday.
Patrick Wadula, Absa's head of media relations, said the bank only became aware of a case in which a pensioner was granted a R350000 bond and couldn't repay it when contacted by Sowetan's sister newspaper, the Port Elizabeth-based Herald.
It was then that Absa started investigating how an 81-year-old pensioner was given a bond when the instalments were more than his monthly income.
Gaenor de Kock, a debt counsellor at Debt Smart in Port Elizabeth, told Sowetan yesterday that the pensioner, who did not want to be named, got the home loan for his daughter from Absa in September 2007. The daughter signed surety, which is allowed by the National Credit Act.
The pensioner's monthly income was R3700 and after taking into account living expenses, including food, electricity and petrol, he was only left with R1305 with which to service any other debt.
His last payment was in October and when the arrears continued to mount, the man received a Section 29 letter from Absa in accordance with the NCA.
One of the options that Section 29 of the Act gives debtors is to consult a debt counsellor for help. At the point when the pensioner approached Debt Smart the bank was threatening to repossess his house.
De Kock said: "He came to us in February and we took on his case. We went through all the paperwork and found his application forms at Absa show his income and expenses. It should have been clear to the loan officer that this man could not afford to service the loan."
Together with Pierre Kitching Attorneys, Debt Smart took the pensioner's case to the Port Elizabeth magistrate's court, where a judge ruled last week that Absa was guilty of reckless lending.
The judge further ruled that the bank must write off the full R374000 debt, which was capital plus interest on arrears.
The bank's deputy chief executive Louis von Zeuner told wire news service Bloomberg that the bank may appeal the charge.