Ithala bank customers have welcomed the announcement that they will soon access their money but are demanding interest on funds that had been locked away for nearly a year.
KwaZulu-Natal Premier Thami Ntuli announced on Monday that customers will gain access to their money this month after the provincial government reached an agreement with the National Treasury (NT), which provided the R2.2 billion guarantee that was needed in order to allow for the repayment process.
Reacting to the news, customers said the decision will end months of hardship but have demanded to be paid interest that would have been generated on their funds that have been in the bank all these months.
In announcing the disbursement of the funds, Ntuli said, “I am pleased to announce that we have reached a historic breakthrough. We have successfully concluded all agreements required to begin the repayment of Ithala SOC Limited depositors.
“This milestone removes the final legal and administrative barriers and ensures that depositors will begin accessing their funds before Christmas.” Some of the bank's depositors who spoke to The Mercury are furious that they were unable to access their money for several months.
One said, “We are still angry about this; our money has been trapped in the bank. How would you feel if something like this had happened to you? We have been disrupted in our plans because of this. They must pay us interest on that money?” Another customer said they were happy, as this was ending months of hardship: “This is a bank that we survive on; life has been very difficult after the bank was closed.”
Thabang Mncwabe of the National School Nutrition Programme (NSNP) said they cautiously welcomed the announcement, as their members had been brought to the brink of ruin by the freezing of the bank’s operations. Many members rely on the bank to facilitate their purchase of food that they supply to schools.
“The NSNP service providers note the announcement by Premier Ntuli; however, after so many misleading announcements from him, we don’t want to be jubilant, as this might be another lip talk. We shall wait for the process to unfold rather than reach conclusions. Currently, the service providers are under severe distress due to the freezing of their finances without interest accrued.”
A letter from the National Treasury confirming the agreement is, however, raising concerns about the long-term future of Ithala and its ability to continue operating. The letter spells out that the process to liquidate the bank will continue.
“The liquidation case is still pending, and a date has not yet been set for the matter to be heard.”
It stated, “The National Treasury, following consultations with the KwaZulu-Natal Provincial Government, will make up to R2.2 billion available to enable the repayment of depositors of Ithala SOC Limited (‘Ithala’).”
“Depositors have been unable to access their funds since January 2025, following the Prudential Authority's application to liquidate Ithala due to solvency issues and regulatory breaches. The liquidation case is still pending, and a date has not yet been set for the matter to be heard.”
A source in the bank said employees are concerned about the bank's future.
“The statement issued by the premier on Monday said something else, and the statement by the National Treasury today is saying something different. There was an understanding that as soon as the guarantee was in place, the repayment administrator would leave, but that is not happening. The case is still ongoing, and Ithala is left with almost nothing at this stage.”
ActionSA MP Alan Beesley said the bank was not out of the woods yet.
“As ActionSA, we welcome the confirmation that depositors of Ithala will finally be able to access and withdraw their funds with Ithala. Depositors have been denied access to their funds through no fault of their own. This has created huge financial difficulties for many of the depositors as well as heightened anxiety. With depositors having access to their funds, it is clear that Ithala’s days are limited.
“Taking and holding deposits is a key aspect of Ithala’s business model, and without this ability, Ithala will not be able to continue trading. This is extremely disappointing, as Ithala’s mission was to serve those in rural communities,” Beesley concluded.
It has been previously reported that the South African Reserve Bank's Prudential Authority (PA) had appointed a Repayment Administrator Johan Kruger last year to deal with the management of deposits that Ithala held.
While Ithala had been conducting the business of a bank and accepting deposits from members of the public, it had no banking licence but was operating in terms of the exemption granted to it by the Finance Minister.
When that exemption expired, the PA appointed a repayment administrator to recover and take possession of all deposits taken by Ithala from depositors or under its control in terms of the Banks Act.
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