Some of the 223 166 of Ithala Bank’s clients could soon access their money, which is currently trapped in the historic KwaZulu-Natal bank.
This news comes after a Pietermaritzburg High Court ruling clarified the role of the repayment administrator (RA), Johan Kruger.
In Friday’s ruling, the court confirmed that the RA’s powers are only limited to the preservation and repayment of deposits and do not extend to interference with Ithala’s non-deposit-taking operations.
The Prudential Authority (PA) appointed Kruger to oversee Ithala’s operations in preparation for a liquidation process.
However, a dispute emerged between Ithala and Kruger regarding his role.
Ithala, backed by the KwaZulu-Natal provincial government, the sole shareholder, took Kruger to court, and the latter was backed by the PA in a fightback.
Last November, the same court ruled that Ithala can partially operate but not take deposits. The order was disputed by the parties, and they had to return to court for clarification while an appeal is still pending before the Supreme Court of Appeal (SCA) in Bloemfontein.
In Friday’s ruling, a full bench of the court confirmed that Kruger’s role is limited to preserving and repaying the deposit book, and Ithala and the administrator must cooperate in developing and implementing the repayment plan.
Tool for economic development
After Friday’s ruling, the provincial government said it remains committed to ensuring Ithala continues serving customers — particularly in rural and underserved communities.
“Ithala is a vital instrument for economic development and financial inclusion, delivering essential services such as employee payroll and social grant distribution,” said the provincial government.
“During this transitional period, the provincial government will work closely with the Prudential Authority, the Repayment Administrator, the National Treasury, Absa, and relevant provincial departments to safeguard essential payments wherever possible.”
It added that the immediate next steps include finalising the heads of argument for the SCA appeal of Judge Thomas Ncube’s November 2024 order and intensifying engagement with stakeholders to secure interim arrangements under the consent order that protect payroll and grant disbursements.
“The provincial government will also pursue confirmation of any government-backed guarantees or cashback arrangements pledged to Ithala’s depositors, while maintaining open communication with Sassa [SA Social Security Agency], labour representatives, service providers and community groups to manage operational impacts,” it added.
The national treasury has proposed that a government guarantee of R2-billion will be made available, but the provincial government will have to repay it.
