Thousands of Ithala depositors will finally breathe a sigh of relief this festive season after an announcement this week confirmed that they will start accessing their funds from December 8.
For many, it marks the end of an agonising year defined by uncertainty, court battles and repeated protests outside Ithala’s offices.
The KwaZulu-Natal-based financial institution was forced to cease operating as a bank late last year and more than 270,000 depositors could not access their life savings in January.
What followed was a cascade of litigation between Ithala, the Prudential Authority (PA) and the appointed repayment administrator (RA). Court findings so far have upheld the need for a structured repayment process, but pending cases continue to hang over the institution’s future.
In announcing this groundbreaking deal, KwaZulu-Natal premier Thami Ntuli told reporters that the agreement came about after long hours of behind-the-scenes meetings.
He said this was necessary as it would bring much-needed relief to families who have endured months of hardship. “This payout process is a victory for ordinary depositors who have been patient and resilient. It ensures that our people can enjoy the festive season with dignity,” Ntuli said.
National Treasury confirmed that R2.2bn has been set aside to repay depositors. Treasury said the guarantee was signed under strict conditions to protect both depositors and the fiscus. The funds will be released in phases, with oversight mechanisms in place to ensure transparency and accountability.
The Treasury’s guarantee was not intended to save Ithala itself, but to ensure an orderly transfer of deposits to another institution — a move shaped by political pressure from the KZN ANC, the Zulu king, political and social personalities on finance minister Enoch Godongwana.
It is not clear whether the deal also includes iThala opening its loan book to let other stakeholders know who the political leaders are, their family members, iThala management and staff members who were given huge loans. These loans led to the financial instability that forced the hand of the PA to pull the plug by withdrawing the bank’s temporary licence to take in deposits and operate as a banking institution.
FNB, appointed by Treasury to administer the repayments, said it was ready to begin the process through its national branch network.
“We are committed to ensuring that Ithala customers receive their funds efficiently and securely. Our branch network is prepared to facilitate the process, and we urge depositors to follow the instructions provided via SMS,” FNB said in a statement.
I was keeping this money for rainy days and to build my family home. But we went through hell. Furthermore, Ithala has not informed us whether the money we banked continued to accumulate interest during all these months or if we are only going to get the funds we deposited. Many of us had to borrow from loan sharks to cover our day-to-day activities, and it would be unfair to only get back what we deposited.
— Ithala customer Thola Ngwane
Customers will be required to present a South African ID and proof of residence to verify their accounts before payouts are processed.
For depositors, the announcement caps a gruelling year of frustration.
Philisiwe Dladla, a Durban-based depositor, said she had feared a “black Christmas” after months of being in the dark about the fate of her lifetime savings. “Now, this news is most welcome. It means I can finally celebrate with my family without the cloud of uncertainty hanging over me,” she said.
Thola Ngwane, a 40-year-old depositor from Escourt, said he received an SMS from FNB at about 3pm on Tuesday introducing itself and alerting customers that payouts would begin on December 8, with the process expected to take about three months.
“I was keeping this money for rainy days and to build my family home. But we went through hell. Furthermore, Ithala has not informed us whether the money we banked continued to accumulate interest during all these months or if we are only going to get the funds we deposited. Many of us had to borrow from loan sharks to cover our day-to-day activities, and it would be unfair to only get back what we deposited,” Ngwane said.
The legal complexities remain.
Francois Trichardt, the legal representative of the RA directed inquiries to the PA.
“As the legal representative of the RA, we are subject to the confidentiality regime set forth in Section 33 of the SARB Act. Your query should nonetheless be provided to the media liaison of the Prudential Authority.”
The PA acknowledged receipt of a query but had not responded at the time of publication.
While payouts are set to begin, questions remain about Ithala’s long-term viability and the outcome of pending litigation. Analysts say the case highlights the fragility of smaller state-owned financial institutions and the importance of regulatory oversight.
For now, however, depositors are looking forward to a festive season that promises joy instead of despair. After months of waiting, the money they worked hard to save will finally be back in their hands.
FNB said customers will have a three-year period to claim and collect their Ithala pay-outs from FNB.
The banks said that in the event of a deceased customer, the details of the executor or the death certificate must be provided to FNB.
“This will be managed on a case-by-case basis, and where applicable, reasonable accommodation will be made,” the bank said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.