Ithala Bank customers regain access to funds, but frustration over withdrawal process remains
Ithala Bank building on Anton Lembede street in Durban.
Image: DOCTOR NGCOBO/Independent Newspapers
Despite customers of Ithala Bank finally being granted access to their money, some have expressed frustration about the lack of information on the withdrawal process.
“We are being told that the money is in FNB, but I have had no communication stating that is indeed the case. I have called FNB to ask about this process, and they asked if I had received any communication on this. Since I did not have it, they could not help me,” said one of Ithala’s customers.
It has been reported recently that close to R200 million has been paid to the bank’s customers via FNB. Ithala has not been able to operate for close to a year after it lost the exemption to operate as a bank and was taken over by the repayment administrator. For that period, many of the bank’s customers could not access their money.
A few weeks ago, the provincial government announced that it had struck a deal with the National Treasury that allowed customers to access their funds. It said the customers would be contacted to go to FNB to withdraw their money. They would start having access to their money from December 8.
A businessman who banks with Ithala, and who asked not to be named, said he has not had any contact with FNB on how to retrieve his money. “This situation is quite frustrating; I have no clue on how to get my money back. I have been a customer with a business account at Ithala for the past 10 years.”
He stated that even if the money is returned, the damage caused by the freezing of Ithala’s operations was immense and would be hard to recover from. “Remember that at Ithala, there was an arrangement where we could buy stock and the bank would support us. When the bank was closed, that stopped. With the bank still closed, that support will cease too.”
“In my case, the situation is worse. My account was a business account; not having access to those funds for close to a year is damaging. Even if they return that money, if they return only what I had put in there and no interest, that is a huge loss for me.”
He expressed feelings of being let down as a business person by the government. “We feel what happened to Ithala was intended to sabotage the bank and, by extension, black emerging small business people. If there was really something wrong with the bank, someone should have been arrested by now. The person who was supposed to apply for the licence but did not do so should have been held accountable by now,” said the business person.
MEC for Economic Development, Tourism and Environmental Affairs (EDTEA) Musa Zondi said, while they were not in charge of the process to disburse the funds, they understood that not all customers of the bank have chosen to withdraw their money. “We do not have sight of the process as that is being managed by the National Treasury, but we understand that some customers have gone to FNB and they have been paid, but not all of the customers have chosen to withdraw their money.”
“We do not know how much has been paid out, but the figure of R200 million that is being reported is nothing compared to the billions in cash that the bank had managed,” he said. Zondi mentioned that the bank was not finished and was in the process of working through all the legal and compliance regulatory matters that would lead to it finally being granted a licence to operate as a bank. “We cannot just jump the gun and say when that might happen as that process is managed by the National Treasury,” said Zondi.
Highly placed sources at the bank said the repayment process was still fraught with threats to the entity, including that should the customers not be happy with the repayment value, Ithala could be held liable for that despite having no money and playing no role in repayments.
ActionSA MP Alan Beesley said they welcome the fact that depositors of Ithala will finally be able to access and withdraw their funds. “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,” he said.