KwaZulu-Natal Premier Thami Ntuli said that Ithala SOC stands as a testimony to the visionary leadership of the IFP’s Founding President, Prince Mangosuthu Buthelezi.
Ntuli was speaking at a briefing on Tuesday, following the recent developments surrounding the province’s development finance institution Ithala Bank. The announcement by the Prudential Authority (PA) on the alleged insolvency and non-compliance by Ithala has caused widespread concern and panic.
Ntuli described Ithala as an institution that champions economic justice and inclusion, providing vital banking services to rural and under-served areas for decades.
Ntuli said that Ithala has been at the forefront of empowering small businesses, fostering savings through stokvels, and supporting Small, Medium, and Micro Enterprises (SMMEs) that have been excluded from mainstream financial assistance.
Ntuli questioned the timing and motives behind the recent actions of the Repayment Administrator (RA) and PA to halt Ithala SOC’s operations.
“This intervention, imposed at the end of the month, disrupts critical services, including the processing of salaries, payment of policies, medical aids, cars, and preparations for the return to school,” Ntuli said.
Even more concerning, said Ntuli, is the impact on Ithala’s dedicated staff, who now face uncertainty over their salaries.
“Such actions appear calculated to incite panic, destabilise Ithala’s operations, and erode public confidence in the institution. This deliberate chaos is an affront to the proud legacy of Prince Mangosuthu Buthelezi, seemingly aimed at undermining Ithala’s vital role and creating a path for its closure to the advantage of commercial banks,” Ntuli said.
“We firmly believe that, if there were no ill intentions toward dismantling Ithala, the Prudential Authority would have opted to provide guidance and support to address any compliance concerns, rather than resorting to aggressive actions aimed at forcing Ithala’s closure.”
Ntuli said such actions appear to serve the egos of those seeking to benefit at the expense of Ithala.
“Ithala represents an important legacy for the KwaZulu-Natal Government, as it was established by the former KwaZulu Government as a state bank to empower and assist marginalised communities,” Ntuli said.
“The provincial government is strongly opposed to the interruption of the activities of Ithala. Our view is simply that the Prudential Authority’s claims are unfounded and seem part of an agenda to undermine the operations of Ithala Bank,” Ntuli said.
Ithala operates under a banking licence exemption, which expired on December 15, 2023. Despite applying for a full banking licence in 2016 and 2023, both applications were declined by the Prudential Authority.
“Most troubling is that the 2023 application was dismissed without being properly assessed, raising concerns about the authorities objectivity and intent,” Ntuli said.
Ntuli said, contrary to the PA’s claims, Ithala’s financial position remains sound, as evidenced by:
- Clean audits from the Auditor-General for over a decade;
- Assets exceeding liabilities, affirming its financial stability;
- Continued business operations with no risk to depositors’ funds.
Thus far the intervention of the provincial government has been to approach our courts for intervention.
On January 23, the provincial government through the Department of Economic Development, and Ithala Bank, represented by their legal teams, submitted a request to have the court preside over an urgent application concerning Ithala Bank.
This was initially set for a hearing today, January 28. We were subsequently informed by the Registrar of the Pietermaritzburg High Court that Justice Ncube is currently on leave and is only scheduled to resume duties on February 17.
In response, the department reached out to the Judge President to allocate another judge for the urgent hearing. On Monday, the Judge President decided to remove the matter from the court roll.
A meeting has been scheduled with the senior counsel representing all parties involved for tomorrow Wednesday, January 29, to discuss the way forward for this case. The department’s and Ithala legal teams will be notified by the Registrar once the Judge President makes a further determination regarding this matter.
In any event, the effect of these developments is that the urgent application set for January 28 will no longer proceed.
However, Ntuli’s concern at this stage is that the liquidation application remains on track for January 30.
“We remain steadfast in its commitment to protect and preserve Ithala Bank. I have escalated the matter directly to President Cyril Ramaphosa. During my engagement with the president, I highlighted the rushed and questionable intervention by the Prudential Authority and emphasised the need for an urgent and equitable resolution to this matter,” Ntuli said.
The haste with which the Prudential Authority acted has shocked Ntuli and government officials.
Ntuli said his discussion with Ramaphosa was both productive and constructive, with a firm commitment to prioritising the Ithala SOC issue.
“Preserving Ithala is not just about protecting a financial institution, it is about safeguarding the future of marginalised communities who depend on its services,” Ntuli said.