The KwaZulu-Natal High Court in Pietermaritzburg has ruled that beleaguered Ithala bank can resume operations.
This comes after the bank’s fight to survive liquidation by the South African Reserve Bank’s (SARB) Prudential Authority (PA).
In a judgement, on Friday, Judge Muzi Ncube ruled that Johannes Kruger, SARB’s appointed Repayment Administrator (RA) has no right to take over the operational and day-to-day management of Ithala.
Judge Ncube further clarified that Kruger was prohibited from taking over the human resource, treasury, marketing, finance, and any other operational functions of Ithala.
In November 2024, Judge Ncube ruled against the RA’s application to stop operations which were not deposit- taking, however, the RA appealed the decision which paved the way for the halting of all operations, including the freezing of funds and this also prevented the bank’s debtors from making payments to the bank.
This prompted the bank to lodge an urgent application in a bid to access the frozen funds to pay staff salaries after the PA in January suspended all activities on the bank’s accounts.
KZN Finance MEC, Francois Rodgers said this was a relief as Ithala will continue operating and serving its clients.
“Henceforth, Ithala retains the permission to conduct all legally permissible transactions including disbursement of salaries and money owed to suppliers. It is unfortunate that Mr. Kruger’s actions have thus far caused untold pain on residents, jeopardised SMMEs in the province and limited Ithala’s ability to function properly,” said Rodgers.
He further added that Kruger had never acted in the best interests of Ithala and its retail depositors.
“It should be remembered that this is the second time that Judge Ncube has affirmed that Mr. Kruger has overstepped in his powers. Unfortunately, we are concerned that some of the damage caused by his actions may prove impossible to reverse.
“Ithala serves a niche market of mainly rural residents who are not easily assisted by large commercial banks. Attempts to systematically shut the entity down are malicious and laden with greed. They demonstrate a total disregard for indigent residents,” he said.
The bank was founded by the late inkosi Mangosuthu Buthelezi during the times of the KwaZulu government in 1958 with an intention to assist with economic development and empowerment in the province.
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