A repayment administrator has determined that Ithala Bank is technically and legally insolvent. (Photo: Kasi Economy / X) 
The National Treasury, following consultations with the KwaZulu-Natal Provincial Government, will make up to R2.2-billion available to repay about 275,000 Ithala depositors.
The payout process will start on Monday, 8 December, and depositors will first need to be verified to ensure payments go to the correct recipients. Once verified, payments will be processed within approximately two days.
First National Bank (FNB) has been appointed as the payout bank for Ithala depositors and will facilitate access to their funds. This arrangement is intended to ensure that funds are paid out in an orderly and secure manner.
In January, the South African Reserve Bank’s Prudential Authority (PA) applied to the KwaZulu-Natal Division of the High Court in Pietermaritzburg for the provisional liquidation of the development finance agency Ithala SOC, after a repayment administrator determined that it was technically and legally insolvent.
Although commonly referred to as a bank, Ithala was never granted a banking licence. It did, however, have a temporary exemption, which allowed it to receive deposits while it regularised its operations. On 22 July 2022, the PA issued a final exemption notice, advising that Ithala would have a final opportunity to regularise its deposit-taking activities, and warning that non-compliance would lead to the withdrawal of the exemption
Depositors will not be required to become FNB clients and may choose to transfer their funds to a bank of their choice. However, no payouts will be made at Ithala branches.
How depositors will be contacted
Depositors must be contacted by FNB via SMS before visiting a branch for verification. The documents required for verification are:
• An ID;
• Proof of address; and
• Proof of an alternate bank account where your money can be deposited.
How and where payouts will be made
Payouts can be accessed at any FNB branch. As the largest concentration of Ithala customers is in KwaZulu-Natal (KZN), FNB is extending its operating hours in the province, to best support those affected customers.
From Monday, 8 December to Wednesday, 31 December, FNB KZN branches will be open from 7.30am to 5pm. FNB will make payments to any bank where the recipient is the primary account holder. An eWallet payment can also be facilitated and FNB will also assist with the opening of new FNB accounts for the payment should the customer request this. It is not compulsory to have an FNB account.
“These Ithala customers have not had access to their funds since January this year, and helping them is a priority for us,” said Jacqui O’Sullivan, an executive at FNB Corporate Affairs.
“Through our safe and secure banking solutions such as eWallet and our extensive branch and ATM network, we will make this process as simple and easy as possible for customers to obtain their funds.
“Real financial inclusion requires customers to trust their banking channels, and we want to empower Ithala customers to claim back what is theirs and to have full faith in the safety and security of the process being offered to them.”
Depositors will have until 2028 to claim their payout.
Loan repayments
Depositors with existing loans are required to continue repaying their loans to the dedicated Absa account number: 406 776 2302.
Depositors have been unable to access their funds since January, following the PA’s application to liquidate Ithala due to solvency issues and regulatory breaches. According to the National Treasury, the liquidation case is still pending, and a date has not yet been set for the matter to be heard. DM