Ithala SOC Limited, often called a “bank” despite never officially having a banking license, is facing liquidation. The Prudential Authority (PA) has applied to the Pietermaritzburg High Court for its provisional liquidation, leaving around 257,000 depositors in limbo.
Here’s the scoop: Ithala was given a temporary pass to accept deposits under the Banks Act, but it struggled to meet the conditions laid out for it to officially become a bank. Despite numerous extensions, the final exemption expired in December 2023. Fast forward to now, and it turns out Ithala is insolvent, meaning it can’t pay back what it owes.
Adding fuel to the fire, the KwaZulu-Natal provincial government—its main shareholder—failed to come through with a financial guarantee. As a result, the PA has decided to go the liquidation route to protect depositors, though it means closing accounts to prevent a mad rush on the bank.
The good news? The National Treasury has stepped in, guaranteeing depositors’ funds to ease the panic. But, as a wise person once said, “don’t put all your eggs in one basket”—now’s a good time to make alternative banking plans.
Stay tuned for updates as the court takes its next steps, but in the meantime, secure your funds and avoid any future surprises!
Source Info: https://businesstech.co.za/news/government/807232/south-african-state-owned-bank-faces-liquidation/