MEC Zondi forms task team as he amps up efforts to rescue Ithala

THE MEC for Economic Development, Tourism and Environmental Affairs (Edtea) in KwaZulu-Natal, Reverend Musa Zondi, has amplified his effort to rescue Ithala Bank from impending liquidation, by appointing a technical advisory team to address myriad issues raised by the Prudential Authority (PA).

Furthermore, the Daily News has learnt from well-placed sources in the provincial government that Zondi has requested an urgent meeting with the PA officials to explore potential solutions to navigate the crisis plaguing the bank.

The Prudential Authority (PA) filed for the bank's liquidation, citing serious allegations of non-compliance and insolvency, putting the futures of approximately 257,000 clients at stake.

The situation has escalated to a legal confrontation, with the matter now set to be heard at the Pietermaritzburg High Court on Friday.

With legal proceedings looming, concerns mount over the ramifications of the bank's potential closure on its depositors, who are currently unable to access their accounts or make new deposits.

In an official statement, the KZN provincial government, spearheaded by Premier Thamsanqa Ntuli, openly opposed the PA’s move to liquidate the bank.

This backlash raised fundamental questions about accountability for what many perceive as a failure in regulatory oversight.

While Ithala Bank was often referred to as a conventional bank, it never held a formal banking licence.

Operating under an exemption from the Banks Act, Ithala has been locked in a protracted struggle for over a decade to secure what has become an elusive permanent licence.

In response to the PA's liquidation application, Ithala Bank has vehemently disputed the allegations, labelling them as “fundamentally flawed, frivolous, and based on erroneous calculations.” The bank's statement further condemned directives issued to halt operations, arguing that such measures severely impeded customer access to funds at a critical juncture, particularly as many families face financial burdens associated with the new school year.

“Kruger’s directive to all Ithala service providers to halt operations directly undermines our customers’ access to their funds and the ability to conduct transactions,” the statement emphasised.

However, amid those developments, the National Treasury has attempted to reassure retail depositors by confirming that their funds would remain protected under a government guarantee, contingent upon the completion of necessary technical assessments.

Despite the pending crisis, attempts to get a comment from the Prudential Authority were unsuccessful.

Mahlatse Mahlasem spokesperson for the SA Reserve Bank declined to comment, and maintained that the matter was in court.

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DAILY NEWS