Amid the ongoing legal battle to save financial services provider Ithala SOC Limited, the Inkatha Freedom Party (IFP) has come out with gun blazing, saying there was a clear mission to dismantle the entity.
The IFP leads government in KwaZulu-Natal through the government of provincial unity (GPU). It alleged that the agenda and mission was to bolster major financial institutions by killing those associated with the black majority. Ithala is owned by the KZN provincial government.
Seen as strategic effort to boost major banks
“We will not allow Ithala Bank to suffer the same fate as VBS [Mutual Bank] and African Bank. It is clear that there is a strategic and deliberate effort to consolidate the major banks by collapsing black banks,” IFP President Velenkosini Hlabisa charged during the party’s 50th anniversary celebration, which was held in Durban on Monday.
Hlabisa, who is also the Minister of Cooperative Governance and Traditional Affairs (CogTA, also stated that the party’s rank and file were prepared to take to the streets in defence of Ithala, a financial and insurance services provider.
“The decision by the Prudential Authority to file for the liquidation of Ithala Bank SOC is ill-advised and a travesty of justice and access for our people. The IFP strongly objects to this decision. And we will stop at nothing to defend Ithala Bank. Ithala Bank is the backbone of the black economy,” he said.
Insult to bank’s late innovator and IFP boss
The Ithala Bank holds sentimental value within the IFP ranks. The party’s late founder, Prince Mangosuthu Buthelezi, is credited with conceiving the financial institution.
Buthelezi was then the leader of the KwaZulu Government (Z.G). Key to its formation was to assist blacks, who were rejected by the mainstream financial institutions, with easy access to finance
Ithala Bank, which over the years has had troubles of its own, is fighting for survival. The South African Reserve Bank (SARB) wing of the Prudential Authority (PA) wants Ithala SOC Limited to be liquidated.
The decision to liquidate Ithala was triggered by Johannes Kruger, a repayment administrator appointed by the PA. He said the entity was legally and technically insolvent. This, according to the PA, puts the depositor’s money at great risk of being lost. The matter is being heard in the Pietermaritzburg High Court.
Premier vows to support bank’s survival
On Tuesday, KZN Premier Thami Ntuli, together with the MEC for Economic Development, convened an urgent media briefing. He declared the province’s unwavering support for Ithala in its legal woes with the Prudential Authority.
“Ithala has been at the forefront of empowering small businesses, fostering savings through stokvels, and supporting SMMEs that have been excluded from mainstream financial assistance,” Ntuli said.
He also called into question the timing and motives behind the decision to halt Ithala SOC’s operations.
“This intervention, imposed at the end of the month, disrupts critical services, including the processing of salaries, payment of policies, medical aids, cars, and preparations for the return to school,” Ntuli lamented.
Move seen as a political one
He also stated that the move was also political. It is intended to wipe out Buthelezi’s rich legacy and contribution in emancipating the poor masses, he said.
“This deliberate chaos is an affront to the proud legacy of Prince Mangosuthu Buthelezi. It is seemingly aimed at undermining Ithala’s vital role and creating a path for its closure to the advantage of commercial banks,” he said.
The possible liquidation of Ithala also caused panic and shock waves across all its more than 250, 000 depositors. This as they feared losing their hard-earned money.
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