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Minister Enoch Godongwana
Finance Minister Enoch Godongwana says a guarantee of R2 billion has been made available to ensure that whatever happens with Ithala Bank, the savings of depositors are protected.
Speaking to SABC News on the sidelines of the World Economic Forum in Davos, Switzerland, Godongwana says a plan has been devised to ensure that the social grant recipients using the bank are not affected by its possible liquidation.
The Prudential Authority of the Reserve Bank applied to the Pietermaritzburg High Court for the provisional liquidation of Ithala Bank after it established that the bank was insolvent.
The Prudential Authority has filed papers in the Pietermaritzburg High Court for the provisional liquidation of Ithala bank, a move that will affect its 257 000 depositors.
The liquidation application means that depositors’ accounts will have to be closed to allow for the pending court processes.
Government says a guarantee has been made available to protect depositors.
“What the prudential authority has done is to apply for liquidation. The implications of that liquidation, it may wipe out the savings of poor savers who have done that with Ithala. Precisely because the prudential authority, through its agents, couldn’t find money to fund the solvency of Ithala Bank. And in these circumstances, they’ve got no alternative but to file for a liquidation. The bank’s act defines my role as a custodian of depositors, I’ve taken the view that I should protect particularly those who have made savings which are between r100k and lower and made available a guarantee of R2 billion to ensure that whatever happens, their savings are protected.”
Godongwana says there is a bank that has come on board to handle the transfers of the 76 000 affected social grant recipients.
He says the bank is also working on evaluating the other accounts held by Ithala bank, and it’s expected the process will take about 4 weeks.
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