South African banks are headed for a crisis if they do not deal with the increase in unsecured lending, the SACP said on Monday.
"Unless this trend is halted, the banks are headed for a crisis," SA Communist Party spokesperson Malesela Maleka said in a statement.
Maleka was backing comments made on Friday by SACP general secretary and Higher Education Minister Blade Nzimande.
"The South African banking industry is developing towards a huge crisis, likely to lead to a serious bubble, not dissimilar to that of the rest of the global banking and financial sector, unless drastic action is taken to prevent this," Nzimande wrote in the SACP newsletter Umsebenzi Online.
He attributed this to South African banks changing their lending patterns from 2008 onwards.
"During this period, there has been a huge increase in the number of unsecured credit transactions, a phenomenon exactly similar to that which led to the bursting of the housing bubble in the United States, triggering the current global capitalist crisis."
Unsecured lending refers to debt where the borrower does not have to provide any form of security, such as credit card debt.
Finance Minister Pravin Gordhan told the Foreign Correspondents' Association in Johannesburg on Monday that there was "no crisis in the banking system".
He said South Africa's banking sector was one of three which had withstood the financial crisis. The others were those of India and Australia.
Gordhan admitted that there had been a change in the lending patterns of financial institutions. He said it was not clear by how much unsecured lending had grown, as figures from various organisations differed widely, but it had significantly increased.
"If it feeds into consumption rather than investment, then that is a worrying sign."
Gordhan said according to some reports, higher income groups were taking chances with their levels of indebtedness. He said the government would look a lot more carefully at unregulated microlenders to see if they were overcharging on credit.
Banking Association SA managing director Cas Coovadia said on Monday that he was extremely concerned about Nzimande's statements.
"We must emphasise unambiguously that the South African banking sector is not in crisis and any allusion to a bubble is irresponsible," Coovadia wrote in The New Age. He said the South African banking industry was rated second in the world for its stability.
However, the SACP said it would not be silenced by the "bullying tactics" of the Banking Association. Maleka said the National Credit Regulator's consumer credit market report for the third quarter of 2011 "paints a picture of how reckless lending, as manifested by amongst others, unsecured credit transactions, is on the rise in the country".
"These are the figures that the Banking Association pretends to be unaware of," he said.
Maleka said the financial and retail sectors worked together to promote reckless lending.
Nzimande's comments formed part of an attack on Nedbank chairman Reuel Khoza who, in Nedbank's annual report last month, criticised South Africa's leadership.