Ithala SOC Ltd warns that if the Full Bench backs the Prudential Authority (PA) and the repayment administrator (RA) in its appeal, the bank will shut down before the Supreme Court of Appeal (SCA) hears its liquidation case.
On 25 July, the PA and RA Johannes Kruger appealed a High Court decision that allowed Ithala to resume operations – excluding deposit-taking – while liquidation proceedings continue. Ithala restarted core functions on 12 May after the High Court in Pietermaritzburg set aside the PA’s account freeze.
Although often called a bank, Ithala never held a banking licence. Its exemption from the Banks Act expired in December 2023, making deposit-taking illegal. Despite the PA’s October 2023 directive to stop deposits and repay existing ones within 14 business days, Ithala continued accepting deposits.
On 18 December 2023, the PA appointed Kruger as RA to recover unlawfully collected deposits and protect depositors. The Gauteng High Court confirmed and expanded his authority on 21 December, banning Ithala from further deposit-taking without his oversight.
Following the PA’s liquidation application on 16 January this year, about 257 000 depositor accounts were frozen to prevent a bank run. The matter, originally set to be heard on 30 January, has been postponed, with no new date scheduled.
Kruger ordered Absa to freeze Ithala’s accounts, cutting off access to funds needed for salaries, payments, and income collection.
On 17 March, Kruger sought to overturn a November 2024 ruling that limited his powers, while Ithala requested interim relief to lift the account freeze and continue operating during liquidation proceedings.
On 9 May, Judge Muzikawukhelwana Ncube allowed Kruger to appeal to the SCA but ruled that Ithala may operate normally – except for deposit-taking – pending the appeal. The judge clarified that Kruger’s mandate under section 84 of the Banks Act does not cover Ithala’s daily functions or management, which remain under the board’s control per the Companies Act and the Public Finance Management Act.
To avoid disruption, the court barred Absa from blocking payments on Ithala’s authorised accounts and prohibited the RA from interfering with Ithala’s day-to-day business or income collection.
Until the liquidation case is resolved, Ithala may continue ordinary operations excluding deposit-taking and meet its financial obligations.
Read: Ithala resumes operations – but still can’t take deposits
Based on reports from IOL and TimesLive, Kruger urged the Full Bench on Friday, in written arguments, to overturn Judge Ncube’s order allowing Ithala to continue operating, insisting that his mandate to control Ithala’s operations and assets must not be obstructed.
The PA argued the court must balance harm to depositors against harm to Ithala, maintaining that Judge Ncube should have rejected Ithala’s application to avoid irreparable harm to depositors under the Banks Act. The PA highlighted Ithala’s co-mingling of operational and deposit accounts, and said the court wrongly relied on an unlawful, non-existent ministerial guarantee that would protect depositors.
Kruger stated Ithala continued taking deposits unlawfully after its banking exemption expired in December 2023, refusing to commit to stopping despite PA directives. This forced the PA and the RA to seek court enforcement and initiate liquidation proceedings, because Ithala is commercially insolvent and unable to repay more than R2.4 billion in deposits within the mandated 14 business days.
Ithala contended that the PA and Kruger acted beyond their legal powers, disregarding the Constitution and other laws by halting a state-owned company’s operations and cancelling contracts without court orders amid ongoing litigation. It criticised the liquidation application as rushed and designed to destroy the institution rather than protect depositors. Ithala warned closure would cut off access to grants for vulnerable customers.
Supporting Ithala, the KwaZulu-Natal provincial government backed Judge Ncube’s findings, stating the institution has been left in limbo by Kruger’s actions.
Judgment has been reserved.
When are going to get our monies at Ithala bank?
I’m the member of NPO , I want to know that when will get our money
All I need to know is that when are going to get our monies hle ?