Members of Parliament have strongly urged authorities to prevent the closure of Ithala Bank, a KwaZulu-Natal-based financial institution facing provisional liquidation. The Prudential Authority of the South African Reserve Bank has applied for the bank’s liquidation due to its financial instability, claiming this step is necessary to safeguard approximately 257,000 depositors. While the National Treasury has pledged to protect retail depositors’ funds, the KwaZulu-Natal government has requested R2.4 billion to guarantee these deposits. Despite these efforts, Ithala has opposed the liquidation application and is seeking legal intervention to continue operations. Lawmakers have insisted that rather than shutting down the bank, authorities should focus on strengthening its governance and implementing a sustainable turnaround strategy.
Proposals to stabilise Ithala Bank include appointing a team of experts to manage the institution, introducing regulatory changes, and potentially forming a partnership with a major commercial bank. Some MPs have suggested recapitalising the bank or allowing it to operate under a special exemption, as it had done for several years. Advocates highlighted the bank’s crucial role in supporting rural communities, small businesses, and social grant distribution, describing it as a vital instrument for economic empowerment and financial inclusion. IFP MP Poobalan Govender stressed that Ithala is a lifeline for vulnerable populations and should not be allowed to collapse. His call was echoed by representatives from the ANC, MK Party, EFF, UDM, and Patriotic Alliance.
However, concerns about mismanagement remain. DA MP Paul Swart supported the bank’s mission but criticised its poor governance, warning against risking public funds. FF+ MP Hendrik van der Berg insisted the bank should meet regulatory standards or cease operations. Since 2009, Ithala has reported annual losses except for two financial years. The bank claims the Prudential Authority’s actions are stifling its ability to operate effectively. With litigation ongoing and the future uncertain, Ithala’s fate now hinges on a combination of financial support, regulatory adjustments, and improved management.