By Thapelo Molefe
The National Treasury has confirmed it will make up to R2.2 billion available to repay around 250 000 Ithala depositors, marking the first major breakthrough in a financial crisis that left thousands of KwaZulu-Natal residents without access to their savings since January 2025.
The provincial government confirmed on Wednesday that the payout process will begin on Monday, 8 December.
This follows months of negotiations between the KZN government of provincial unity, the National Treasury, the Office of the President, and the Prudential Authority.
Depositors’ access to funds was blocked after the Prudential Authority applied to the Pietermaritzburg High Court in January 2025 for the provisional liquidation of Ithala SOC Limited.
The Prudential Authority’s repayment administrator and subsequent court processes resulted in depositors’ accounts being frozen.
Treasury’s R2.2 billion allocation enables depositors to be repaid but does not in itself halt the liquidation application, which remains pending, with no date yet set for the court to hear the matter.
KZN Premier Thamsanqa Ntuli, speaking during a media briefing earlier this week, said all legal and administrative agreements required to unlock the repayment process had now been finalised, enabling depositors to finally access their funds.
He called the development a “historic breakthrough” after an extended period of hardship for families and businesses who relied on the bank.
“We sincerely and profoundly apologise to every individual, family and business that was affected,” Ntuli said.
“This progress is a victory for the people of KwaZulu-Natal and a testament to disciplined negotiations and strong intergovernmental cooperation.”
Under the arrangement, First National Bank (FNB) has been appointed as the official payout bank. Depositors will be contacted directly by FNB via SMS, with details on verification requirements, including a valid ID, proof of address and proof of another bank account where funds will be transferred.
Depositors will not be required to open an FNB account, and no payouts will be made at Ithala branches.
Once verified, clients are expected to receive their funds within about two days. Depositors will have until 2028 to claim their money.
Ithala, established in 1958 as a provincially owned development finance corporation to serve communities excluded from traditional banking, has long been regarded as a crucial developmental finance institution in KwaZulu-Natal.
Its exemption to operate without a full banking licence expired on 15 December 2023, after more than a decade of unsuccessful attempts to secure permanent authorisation from the Prudential Authority.
Once the exemption lapsed, Ithala’s deposit-taking activities no longer complied with the Banks Act, prompting the Prudential Authority to appoint a repayment administrator and, in January 2025, to apply for the institution’s provisional liquidation. Those steps ultimately led to the freeze on depositors’ accounts.
Earlier this year, President Cyril Ramaphosa authorised the Special Investigating Unit (SIU) to probe suspected maladministration and corruption at Ithala, including the awarding of a roughly R34 million IT tender to Tech Mahindra in 2017 for an integrated banking system.
It has also been alleged, in media reports citing unnamed sources, that some former and current Ithala officials colluded with political and traditional leaders and have been “milking the bank” for years; these allegations are now among the issues under scrutiny by investigators.
Ntuli said support teams would be deployed across the province to assist elderly depositors and those in remote rural areas. All communication will be issued in isiZulu and English through official government platforms, community radio and traditional leadership structures to curb misinformation.
The Premier urged the public to remain cautious and rely only on official announcements.
“No official is authorised to request any fee or payment to release funds,” he said.
Ntuli said the provincial government is finalising a repositioning plan to stabilise the institution, strengthen governance and rebuild public trust after years of mismanagement and regulatory non-compliance.
The National Treasury said it is working closely with the provincial government and the Prudential Authority to ensure a secure and orderly payout process.
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