Port Elizabeth - Absa bank was reportedly discovered guilty of unchecked lending after granting a Port Elizabeth pensioner a loan, without knowing the installments would be far above his entire monthly income, the Herald Online revealed on Friday.

The bank is revealed to grant the 81-year-old pensioner a home loan worth R350 000, while the man, who asked for anonymity, and his wife earned a monthly salary of R3 700.

They revealed to spend R2 472 as household expenditure of, and the monthly installment on the bond was R4 200.

The man defaulted on his repayments and the bank warned to again fetch his home in Lorraine, triggering the debt counselors to take up his case knock the court's door.

Banking ombudsman Clive Pillay cites that the banks should be aware of the fact that they were not above the law and possess a moral duty to abide with the National Credit Act (NCA).

The act was specifically framed in a view to shield consumers from becoming overly indebted. The act is reportedly been in operation for four months when the pensioner underwent the loan agreement with Absa.

An Absa spokesman uncovered to the Herald Online that the bank would issue a statement later. - Sapa