Nedbank's R419,000 recovery attempt thwarted as court allows farmers to challenge alleged reckless lending practices
Image: Nedbank/Facebook
Nedbank’s attempt to recover about R419,000 from a farming group has been blocked and a case of reckless lending will now be heard by the court.
This comes after the Mpumalanga High Court ruled that the borrowers had raised a valid defence under the National Credit Act, which will now be tested in a full hearing.
The bank had applied for summary judgment, arguing that the debt was due and payable and that there was no bona fide defence to the claim.
However, the court found that the respondents had raised a defence that could not be dismissed at this stage, including allegations of reckless lending, and that the matter should proceed to trial.
The issue was in court over a R200,000 overdraft granted in May 2021, which was increased temporarily in October 2023. Summons was then issued last year after the farming group hadn’t paid.
In its ruling, the court stressed that summary judgment is an extraordinary remedy and should not be granted where a defendant presents a defence that is bona fide and good in law.
The respondents argued that the credit agreement fell foul of the National Credit Act, contending that Nedbank had failed to properly assess their financial position before extending credit.
Under the Act, lenders are required to conduct affordability assessments before granting credit, including evaluating a borrower’s financial means, debt repayment history and ability to understand the risks of the agreement.
Reckless lending can arise where no such assessment is done, or where credit is granted despite clear signs that the borrower cannot afford the repayments or does not fully understand the risks.
The National Credit Regulator conducted 381 monitoring exercises into reckless lending during the most recent financial year, down from 430 the year before, while issuing 360 instructional letters to credit providers to correct contraventions of the Act.
The regulator has also flagged growing non-compliance with affordability assessments, identifying this as a major contributor to consumers becoming over-indebted.
In January 2025, the National Consumer Tribunal handed down a ruling against a credit provider found to be in gross contravention of the Act, imposing a R1 million fine – the first of its kind.
In that matter, the tribunal found that the provider had deliberately granted credit without proper affordability assessments, charged unlawful interest and fees, and entered into reckless credit agreements, which were declared void.
The court in the Nedbank matter found that the defence raised by the respondents, if proven, could affect the enforceability of the agreement and therefore could not be summarily dismissed.
As a result, the court refused to grant summary judgment, allowing the respondents to continue defending the claim in full proceedings.
“The court is not making a ruling that the [National Credit Act] is applicable to the agreements entered into by the parties but merely stating that should it be found that the [National Credit Act] is applicable and the agreements are not compliant with the terms thereof, then the defence is good in law,” the ruling read.
If reckless lending is ultimately established, the National Credit Act allows a court to suspend or set aside all or part of the debt. The ruling means Nedbank will now have to prove its case at trial, where the allegations will be tested on the evidence.
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