The long‑awaited process of paying back more than 270,000 Ithala Bank depositors began on Monday, but not without glitches.
First National Bank (FNB), appointed to facilitate the payouts, initially turned away customers after systems failed to access Ithala’s records.
By midday, however, the problem was resolved and those affected were processed.
The deal to appoint FNB followed months of negotiations between the KwaZulu-Natal government, the National Treasury, regulators and other Ithala stakeholders.
National Treasury agreed to release R2.2bn to secure the payment of iThala depositors, as the bank’s own funds had run dry.
FNB will transfer funds either into customers’ existing accounts or directly into FNB accounts for those who bank with them. To ease the strain, the bank has extended operating hours in its KwaZulu‑Natal branches, which will open from 7.30am to 5pm.
For depositors, Monday was a day of relief mixed with lingering frustration.
Durban mother of two Bule Mnguni said: “We arrived very early on Monday morning with a group of other Ithala Bank customers. Initially they told us the systems are down and they cannot access our information. We waited outside and by midday or so they called us in and told us they had sorted out the problem. They told us we will get our money in three days.”
The question I had asked but could not get clarity on was since our savings had been held at Ithala for so long, are they going to pay the interest due to us? Many of us had to borrow money and we had to pay back these monies with huge interest. Who is going to cover us because this crisis wasn’t made by us? It was caused by the politicians and the bank officials.
— Ithala customer Mduduzi Shezi
Customer Mduduzi Shezi was angry after waiting since January to access his lifetime savings.
“The question I had asked but could not get clarity on was since our savings had been held at Ithala for so long, are they going to pay the interest due to us? Many of us had to borrow money and we had to pay back these monies with huge interest. Who is going to cover us because this crisis wasn’t made by us? It was caused by the politicians and the bank officials.”
Many other depositors said they are hopeful they will have a better festive season after months of waiting in vain.
KwaZulu‑Natal government spokesperson Lindelani Mbatha confirmed that the process had started as agreed.
He said officials were monitoring the situation closely and KZN premier Thami Ntuli would provide a comprehensive update at a media briefing scheduled for Wednesday in Durban.
An FNB staffer added that the bank would also brief the media on Wednesday about the number of customers serviced and the challenges encountered.
Monday’s start comes after months of turmoil that left depositors desperate and angry.
During the impasse, it was not only depositors who were affected. The National Education, Health and Allied Workers’ Union (Nehawu) said its members were affected as salaries were not paid on time and sometimes were not paid in full.
Protests erupted outside branches and government offices, with depositors demanding accountability and access to their savings.
Many families were forced into debt, borrowing money at high interest rates while their deposits remained locked away. Some elderly customers were hospitalised due to the induced stress, and at least two depositors died while they were waiting.
The payouts mark a turning point in Ithala’s troubled history, but questions remain.
Depositors want clarity on whether they will be compensated for lost interest and whether those responsible for the crisis will face consequences. For now, the reopening of payments offers a measure of relief, but the scars of months of hardship and mistrust will not fade quickly.
Beyond the long‑awaited depositor payouts, Ithala Bank remains mired in cascading legal and governance challenges.
The institution remains entangled in cascading litigation and allegations of mismanagement. Among the most serious claims are that loans were extended to politicians, their families and senior staff under questionable circumstances.
Calls for transparency have grown louder, with civil society and opposition parties demanding that Ithala open its loan book. The bank has so far refused, citing client confidentiality, a stance that has only deepened suspicions about how public funds were handled.
The next major legal hurdle comes in the Pietermaritzburg high court in early 2026.
The case involves the South African Reserve Bank’s Prudential Authority, which has applied to liquidate Ithala after its exemption under the Banks Act expired in December 2023.
At issue is whether the bank operated unlawfully and whether a full liquidation is necessary to protect depositors and creditors.
This hearing will be pivotal, as it could determine whether Ithala survives in any form or whether a liquidator takes control to recover and redistribute funds.
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