Net1 under pressure to have CPS lending practices certified
Cash Paymaster Services has been under fire for deducting money from beneficiaries for other services offered by its subsidiary companies.
CAPE TOWN - The major shareholder of the social grants service provider says it's putting pressure on the company to have its lending practices externally certified.
Net1 is the parent company of Cash Paymaster Services (CPS).
CPS has been under fire for deducting money from beneficiaries for other services offered by its subsidiary companies.
But the World Bank's International Finance Corporation (IFC), which bought a major stake in Net1 last year, insists the company complies with internationally acceptable lending practices.
Last month, the Constitutional Court ruled no deductions are permissible from grants.
But the practice continues and the South Africa Social Security Agency is having to investigate deductions made this month for goods, including electricity and cellphone airtime.
Andi Dervishi, the Global Head of Financial Technology Investments at the International Finance Corporation, says as the leading shareholder in Net1, it wants to ensure the company is continually reviewing its lending practices in line with international standards.
Dervishi says the IFC is pressing Net1 to complete an external review, which started last year, with greater urgency.
The IFC says it also wants Net1 to be more transparent about its marketing practices.
It's been alleged personal information is being shared by CPS with Net1's subsidiary companies which in turn contact grant beneficiaries to offer them goods and services.
The IFC says it's committed to good lending principles and will make sure Net1 adheres to them.
(Edited by Shimoney Regter)