ABIL Brought Down By Reckless Lending

For years, African Bank Investments Limited (ABIL) granted high-interest loans to millions of financially illiterate, low-income South Africans.

The bank statements ABIL produced, in their court case against defaulters, clearly showed that the consumers they belonged to should never have been approved for loans, as they were in no position to pay them back.

On 10 August, ABIL’s R17-billion bad loans portfolio became our problem, as South African taxpayers, when the South African Reserve Bank (SARB) announced it would be buying back this debt, due to ABIL facing a full-year loss.

The National Credit Regulator (NCR) has defended ABIL, citing labour unrest in the mining industry, rising food and fuel prices, and other micro/macro-economic factors as reasons for consumers not being able to pay off their debts.

Meanwhile, the bank filed more than 24 court cases against defaulters at the Johannesburg High Court, despite evidence being uncovered that proves it was well aware that 6 of these borrowers had under-reported their expenses.

Moreover, documents were found revealing that ABIL had granted loans to an individual, who was a known defaulter. It would seem that ABIL itself created this vicious cycle of indebtedness, by simply lending more and more to defaulters, in an effort to get them to pay off previous loans.

ABIL should have known better than to grant loans to consumers, who would clearly struggle to pay them back.  Moreover, these individuals didn’t know any better, as they trusted in the financial institute named after their own continent and homeland.

ABIL’s business model of barely taking deposits, while providing low-income consumers with credit cards and unsecured loans obviously also played a role in its downfall.

In 2014, the NCR sought an R300-million fine against ABIL for 700 cases of reckless lending, where it was discovered that borrowers had been granted loans, even though they had little or no means to pay back instalments. Nonetheless, the NCR ended up accepting a settlement of only R20-million, attributing this decision to ABIL’s co-operation.

ABIL preyed on low-income consumers, granting loans to almost 3 million South Africans, even though 18 million still don’t have bank accounts. ABIL’s banks are prevalent in working-class neighbourhoods and townships, where individuals desperately leap at financial products marketed to them as affordable relief.

If you think you’ve been the victim of reckless lending or are struggling to pay off your loans, Reckless Lending can investigate your financial agreements for you. If we find that any of the loans granted to you are reckless, we will take legal action against these reckless credit providers on your behalf, and get you the financial redress you deserve by having your debts written off.

Please contact us today, by filling in the online contact form and submitting a few basic details.  Just think, you too could have your debts written off!