National Council of Provinces (NCOP)
By Nkosana Khumalo
The National Council of Provinces (NCOP) has issued an urgent plea to save Ithala Bank from liquidation, warning that the KwaZulu-Natal-based institution must not become another VBS Bank, which collapsed due to poor management. With 5,000 jobs at risk and the bank’s vital role in supporting rural communities, NCOP members debated in Parliament to ensure its “continued existence.” The bank’s fate now rests with the Pietermaritzburg High Court, which has reserved judgment on the matter amid growing concerns over economic fallout and the trauma of depositors, including pensioners.
A Lifeline for Rural KwaZulu-Natal
Ithala Bank, a state-owned development finance institution in KwaZulu-Natal, has been a cornerstone of financial inclusion for decades. It serves over 257,000 depositors through 38 branches, offering savings accounts, loans, and insurance to rural and underserved communities often ignored by bigger banks. The bank supports small businesses, cooperatives, and social grant recipients, making it a critical player in the province’s economy. However, the South African Reserve Bank’s Prudential Authority (PA) has flagged Ithala as technically and legally insolvent, pushing for its liquidation in court.
The NCOP has fiercely opposed this move, drawing parallels to the collapse of VBS Bank in 2018. That scandal saw billions of rands looted, leaving depositors penniless and triggering widespread job losses in Limpopo. NCOP Deputy Chairperson Les Govender stressed the need to avoid a repeat. “Unfortunately, the scandal around VBS robbed them of their hard-earned investments. We cannot afford to see such trauma being visited upon more pensioners and the staff of the Ithala Development Finance Corporation (IDFC),” he said during the debate.
5,000 Jobs and Livelihoods Hang in the Balance
The potential closure of Ithala Bank threatens 5,000 jobs, both directly among its employees and indirectly through the small businesses it supports. KwaZulu-Natal, already battling high unemployment, could see a devastating ripple effect, especially in rural areas where job opportunities are limited. The bank’s closure could also disrupt social grant payments, affecting thousands of pensioners and vulnerable households who rely on it through the South African Social Security Agency (SASSA).
ANC member Mxolisi Kaunda highlighted Ithala’s unique role. “Since its formation, Ithala Bank has broken new ground in advancing real financial inclusion in KwaZulu-Natal, particularly for the poor,” he said. He pointed out that the bank has been a lifeline for rural women, pensioners, and small-scale entrepreneurs who depend on its services to survive.
Recent figures from the KwaZulu-Natal provincial treasury show Ithala’s economic weight. As of October 2024, its assets total R3.25 billion against liabilities of R2.93 billion, leaving a surplus of R316 million. The bank also earned a clean audit for the 2023/2024 financial year, raising questions about the PA’s insolvency claims.
The Legal Fight in Pietermaritzburg
The Pietermaritzburg High Court is now the battleground for Ithala’s future. The PA argues that liquidation is essential to protect depositors, citing the bank’s failure to secure a full banking licence. Ithala has operated under a temporary exemption since 2001, which expired in December 2023, leaving it in a regulatory grey area. The PA has appointed a repayment administrator, Johan Kruger, to manage the process, but this move has drawn sharp criticism.
KwaZulu-Natal’s provincial government has hit back, filing an urgent interdict to stop the liquidation. Finance MEC Francois Rodgers called Kruger’s actions “callous,” warning of the impact on SASSA beneficiaries and the province’s unemployment crisis. The government insists Ithala is solvent and has appealed to national leaders, with Premier Thami Ntuli raising the issue with President Cyril Ramaphosa. National Treasury has offered a guarantee to protect retail depositors’ funds, though this hinges on the court’s ruling.
Wider Economic Stakes
The stakes go beyond jobs and depositors. Ithala Bank drives economic growth in KwaZulu-Natal by funding small and medium enterprises (SMEs) and cooperatives, key engines of rural development. Its closure could stall these efforts, deepening poverty in a province where financial access is already scarce. Experts warn that losing Ithala could also erode trust in state-owned institutions, a blow to efforts to uplift black and rural communities.
Public support for the bank is swelling. The Inkatha Freedom Party (IFP), which helped establish Ithala, has vowed to fight for its survival, with leader Velenkosini Hlabisa calling it the “backbone of the black economy.” Traditional leaders, including King Misuzulu kaZwelithini, are planning an imbizo to rally support, while the uMkhonto weSizwe Party (MKP) has framed the liquidation threat as an attack on black-owned entities.
🔴 Central News Weekly Edition | Issue 98 🔴 Download the Latest Print and E-Edition | Headline: “Fezile Dabi Mayor Khasudi: ‘The Boreholes Exist, and the DA is Delivering for Residents”
Download Here:
Direct PDF Link:
https://centralnews.co.za/wp-content/uploads/2025/03/Central-News-Issue-098.pdf
Read all our publications on magzter:
https://www.magzter.com/ZA/Central-News-Pty-Ltd/Central-News/Newspaper/All-Issues
Central News also offers Sponsored Editorial Content, Podcasts , Radio / Social Media Simulcast, Video Production , Live Streaming Services, Press Conferences, and Paid Interviews (Video/Audio) etc.
We guarantee exceptional exposure, reach, and engagement, with an excellent return on investment.
Advertisement:
To place your advert on our platforms (Print Newspaper or Digital Platforms) : Please email : sales@centralnews.co.za
For Business Related:
business@centralnews.co.za
Newsroom:
Send your Stories / Media Statements To: newsroom@centralnews.co.za
General Info:
info@centralnews.co.za
Office Administrator:
admin@centralnews.co.za
Whatsapp / Call: 081 495 5487
Website: https://www.centralnews.co.za
Social Media Platforms (@centralnewsza) : Linkedin, Facebook, Tiktok, Twitter, Instagram, Youtube