NDB stops giving loans

NDB CEO Morapedi
NDB CEO Morapedi

The National Development Bank (NDB) has frozen loan disbursements in respect of all products offered by the financial institution.

Sources have disclosed that the bank is likely to declare a loss of between P10 million to P15 million.

Contrary to the bank’s claim of a clean bill of health, a special general meeting was held to communicate the opposite on January 14, 2015.  The bank management specifically announced to staff that due to a lack of funds, loan disbursements in respect of all products were being stopped.

“The bank is facing very serious liquidity problems and is currently unable to pay out loan funds even to applicants whose loans have been approved,” said one of the insiders.

He explained that loan files awaiting disbursement of funds are stacked up as the bank is working around the clock to manage the financial crisis. Seasonal agricultural loans, especially those of significant amounts that should have long been disbursed to farmers for the rainy season are still pending. He said: “Customers have been kept in the dark with regard to what is happening with the processing of their loans”.

Despite this predicament, towards the end of last year the bank purchased a luxurious Range Rover Sport for the Chief Executive Officer (CEO) Lorato Morapedi from Lesedi Motors at a cost of P875,000.

According to the letter written by the Chief Operating Officer, Samuel Mothibi to the car dealer, the purchase of a company car for Morapedi was in accordance with the NDB executive motor vehicle scheme.

Shockingly, the bank has decided to revive the redundant NDB executive car scheme, which was allegedly abolished along with other benefits and policies a few years ago.

In 2013 the NDB board of directors approved a ‘Clean Pay’ remuneration policy, which dictates that no non-monetary benefits/allowances can be paid outside of an employee’s total salary.  This was in accordance with the confidential Tsa Badiri Consultancy Job Evaluation and Remuneration Review for the bank revised on February 17, 2012.

“One of the main motivators of moving towards a ‘Clean Pay’ policy under which allowances and benefits are either consolidated into base pay, bought out, or eliminated overtime, is to more accurately reflect employment costs. ‘Clean Pay’ represents the total cost to the company for each employee and is a much more accurate and transparent mechanism for accounting for employment costs. Under the purest form of clean pay employees only receive a monthly salary and no additional benefits or allowances. However, in practice companies, which have moved to ‘Clean Pay’ continue to provide retirement and the social benefits,” stated the report.

It further stated: “The first plank of the proposed remuneration policy therefore is the adoption of a ‘Clean Pay’ approach under which the only benefits paid outside monthly cash are provisions for social and retirement benefits. Such a move is provided for under the Revised Incomes Policy White Paper of 2007”. Reached for comment the NDB head of branding, marketing and communications, Harry Marks said his bank is not in any financial difficulty nor is it unable to disburse funds to approved loans.

“The bank ensures that all approved loans are paid out to customers within the desired time frames. The bank, however, is inundated with high volumes of applications from time-to-time due to the seasonal demand of its products and this is more pronounced during the ploughing season where high volumes of applications are received and may cause few delays in loan approvals.  This is a normal cause of business for all financial institutions,” explained Marks.

Marks also denied that they are unable to disburse loans to customers.  He said the bank’s loan disbursements are done through a balanced portfolio budget allocation approach where it is advisable to either stop or cap disbursement limit whenever targets are reached for individual products.  

“It is therefore a normal process that at any opportune moment, the bank may choose to stop trading in any of its products for purposes of either reviewing such product or discontinuing it altogether.

“In essence the bank will on an ongoing basis review its portfolio performance and in line with its Asset and Liability Management Policy, which the Asset and Liability Committee presides over to ensure that the bank has adequate liquidity to meet all its obligations.  It is important to note that loan disbursements are done in drawdown specific to stages of the project,” said Marks.

He added: “On an annual basis, the bank performs onsite assessments of loans at key locations for commercial farmers to ensure timely availability of funds within the ploughing season.  The last ploughing season was not an exception as such disbursements have been done to all farmers affected, with exception of a few who could not meet the required pre-disbursement conditions and constant communication is kept with the applicants”.

Marks also denied that the NDB executive car loan scheme was abolished. However, he explained that staff benefits are contractual and it is in the best interest of the bank and the employees not to divulge such matters to third parties. “It would be very unfair to the employee and against the bank’s policy for the bank to discuss employee’s contract with a third party as this is confidential. To the best of our knowledge this is a practice across every employer including private companies where an employee will be assured that contents of his/her employment contract will only be exposed to his/her eyes and that of the employer.”

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