Staff Reporter
The KwaZulu-Natal government said it was reconfiguring Ithala’s board and investigating management after processing 64,801 customer payments worth R1.685 billion, as it sought to stabilise the troubled state-owned financial institution.
The province said the stabilisation effort had so far covered 32% of Ithala’s customer base and 81% of total deposit value, with individual depositors, businesses and stokvels continuing to access to their funds.
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The Prudential Authority withdrew its liquidation application earlier this year, giving the administration room to pursue a restructuring of Ithala Development Finance Corporation and its subsidiary, Ithala SOC Limited.
“The withdrawal of the liquidation application gives us the opportunity to protect and strengthen this important development institution, ensuring that it continues to serve the people of KwaZulu-Natal,” Premier Thamsanqa Ntuli said in a statement this weekend.
The province said the focus had now shifted from stabilisation to consequence management after the executive council, at a meeting on 27 March 27, found “serious governance and fiduciary failures” inside Ithala SOC Limited.
Those included failure to secure a banking licence within prescribed timelines, weak regulatory compliance, poor financial and risk controls, failure to protect key assets including the loan book, and the submission of unsustainable funding proposals.
As part of its response, the government said Ithala Development Finance Corporation, as the sole shareholder, would convene an urgent annual general meeting to address board reconfiguration, including curtailing current board memberships. It added that executive management remained under investigation and that further action would depend on the outcome.
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Ntuli said a Special Investigating Unit probe into Ithala was continuing and would form part of efforts to restore accountability, with action to follow should adverse findings, including possible criminal conduct, emerge.
“The repositioning of Ithala is not merely a corrective exercise; it is a deliberate step towards restoring a trusted public institution and reaffirming its role in driving inclusive growth,” Ntuli said.
“Where there has been failure, there will be consequence; and where there is opportunity, this administration will ensure it is fully realised for the benefit of all.”
The Ithala saga dates back to the lapse of its final exemption under the Banks Act on 15 December 2023, after which the Prudential Authority said the provincially owned entity could no longer lawfully take deposits.
The regulator appointed a repayment administrator in December 2023 and later said Ithala was technically and legally insolvent.
In January 2025, it applied for liquidation to protect about 257,000 depositors.
National Treasury said in December 2025 it would make up to R2.2 billion available for depositor repayments through First National Bank, while a 2025 SIU proclamation authorised an investigation into alleged maladministration linked to an integrated banking solution tender.