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A Ithala Bank stand at an event.
The Public Servants Association (PSA) has criticized the Prudential Authority’s decision to apply for Ithala’s provisional liquidation, calling it “reckless” and “devastating.”
The PSA accuses the authority of disregarding Ithala’s role in supporting marginalised communities in KwaZulu-Natal.
The Prudential Authority, responsible for the regulation of banks and insurance companies within the South African Reserve Bank (SARB), stated on Thursday that Ithala was never granted a banking license. The finance minister had previously issued Ithala an exemption to accept deposits while it worked to stabilize its operations, but the exemption expired in December 2023.
Following this, the Prudential Authority appointed a Repayment Administrator to manage the repayment of deposits. The appointment was confirmed by the Pretoria High Court in December 2023, and Ithala was ordered to cooperate with the administrator.
PSA Provincial Manager, Mlungisi Ndlovu, expressed strong opposition to the decision, stating, “As PSA in KZN, we are very opposed to the Prudential Authority’s application for provisional liquidation of Ithala. This action will obviously jeopardize the financial security of over 270,000 depositors, threatening the livelihoods of numerous employees, and endangering the economic stability of KZN.”
Ndlovu further argued that the South African Reserve Bank should have intervened to assist Ithala, adding, “Some of the technicalities that prevented this bank from operating on an exemption is because of the Bank Act, which really prevents a provincial entity from being given a license.”
