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Unlike the Venda Building Society (VBS) Mutual Bank in Limpopo, Ithala was not collapsed by cupidity.

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Sizwe sama Yende

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Clients of Ithala SOC Limited can now rest easy that the KwaZulu-Natal based financial institution will not be liquidated following engagement the ANC had with Finance Minister, Enoch Godongwana.

Convenor of ANC Task Team in the province, Jeff Radebe, announced on Tuesday that a breakthrough was reached after the party intervened in the matter.

Ithala, which was widely known as bank, operated under a long-standing exemption from the Banks Act. The exemption expired in December 2023, triggering the Prudential Authority (PA) to file for Ithala’s liquidation in January.

The PA’s action froze Ithala’s accounts, including those of about 257 000 depositors. Ithala resumed operation in May after the Pietermaritzburg High Court ruled that the institution could resume operating, but not take deposits from clients.

Unlike the Venda Building Society (VBS) Mutual Bank in Limpopo, Ithala was not collapsed by cupidity. VBS left the most vulnerable people in society such as pensioners and rural stokvels beneficiaries destitute when politicians and managers embezzled its funds, leaving it R2 billion in the red.

Ithala’s management was able to dismiss allegations that it was technically and legally insolvent through indications that its assets exceeded its liabilities. As of 31 October 2024, Ithala’s assets stood at R3.25 billion and liabilities at R2.93 billion.

Radebe emphasised that Ithala was not established merely as a financial institution but was a development vehicle, which supported emerging businesses and hordes of people excluded by mainstream banks.

“Faced with this looming catastrophe (liquidation), the ANC engaged with the Minister of Finance to seek a sustainable solution aligned with our protection of the institution. A breakthrough was reached. Ithala will not be liquidated,” Radebe said.

He said that the ANC had committed to safeguard the institution and much work lied ahead.

Radebe said the ANC proposed strengthening governance and internal controls within Ithala and enhancing compliance with national banking and regulatory frameworks, exploring strategic partnerships that preserve its developmental mandate.

Radebe added that the ANC proposed a turnaround strategy focused on transparency, accountability, and performance.  It would reposition Ithala as a Development Finance Institution.