The KwaZulu-Natal Economic Development and Tourism MEC Reverend Musa Zondi has assured Ithala customers that they will soon be able to access their money.
Ithala bank is expected to resume its full operations on Monday following the Pietermaritzburg High Court’s Friday ruling which set aside the Prudential Authority’s (PA) decision to freeze the bank’s accounts. The PA had hired the Repayment Administrator (RA) earlier this year to freeze the accounts pending the finalisation of the liquidation application, which is in court.
On Sunday Zondi described the ruling as vindication of the provincial government’s view which had argued that the PA was wrong in freezing the bank accounts despite the bank agreeing to stop deposits in compliance with the non-renewal of the exemption. Zondi said because of the decision to disable the bank’s systems especially the chips in the customers’s bank cards, the RA together with ABSA bank will restore the system for the the clients to start accessing their deposits.
“Firstly we welcome the ruling and want to assure the bank’s distraught customers that their money will be available at the ATMs’( automated teller machines) once the system has been restored, which will happen before the end of the week,” said Zondi.
He said that even the PA’s reason for barring the bank from taking deposits was based on the incorrect assumption that the non-renewal of the exemption applied to Ithala, a public financial institution rather than a commercial bank. He said that requiring Ithala to apply for a banking license meant privatising the bank, as the Banks Act was created for commercial banks.
In the judgement, Judge Muzi Ncube ruled that Johannes Kruger, PA’s appointed Repayment Administrator 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.
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. The matter was heard in March and the judgment was reserved.
Friday’s judgement was widely welcomed by the provincial government and other stakeholders, including political parties who had thrown their weight behind the bank’s survival battle.
The bank was founded by the late Inkosi Mangosuthu Buthelezi with the intention to assist with economic development and empowerment in the province.
