Ithala depositors to receive R2.2 billion payout starting 8 December

The Provincial Government of Unity, in conjunction with the National Treasury, will release up to R2.2 billion to enable the repayment of Ithala SOC Limited (“Ithala”) depositors' funds that were frozen.

The payout process is set to commence on December 8, which will provide great relief for many Ithala clientele who were unable to access the funds at the bank since January. Premier Thami Ntuli said on Wednesday that depositors will first need to be verified to ensure payments go to the correct recipients.

“Once verified, payments will be processed within approximately two days,” Ntuli said. "The First National Bank (FNB) has been appointed the official payout bank for Ithala depositors, offering a reliable avenue for those reclaiming their funds.

Importantly, depositors will not need to become FNB clients, and they may transfer their funds to banks of their choice,” the Premier said, and also indicated no payouts would occur at Ithala branches, which remain closed due to its insolvency issues.

"The payout process is configured for a smooth user experience; depositors can expect SMS notifications detailing the documentation required, including an identity document, proof of address, and details of an alternative bank account for fund transfer.

From Monday, all communication regarding the payouts will be handled by FNB, and depositors will need to visit an FNB branch for the verification process,” Ntuli said.

The Premier explained that the arrangement was intended to ensure that funds were paid out in an orderly and secure manner, with depositors having until 2028 to claim their funds.

Ntuli urged customers who had loans with Ithala to continue servicing their debts, which will be paid into a different bank account at Absa, account number 406-776-2302.

“The National Treasury is working closely with the KwaZulu-Natal Provincial Government of Unity under the stewardship of Hon Premier Ntuli and the Prudential Authority to ensure a smooth and secure process.”

Last week, Finance MEC Francois Rogers, Economic Development MEC Rev Musa Zondi, and the Premier held a joint media briefing to announce plans that were being made to assist depositors with frozen funds and improve the standing of the bank.

The announcement that depositor funds were to be released was made on Monday. Ithala was reported to be insolvent in early 2023, resulting in an application made to the High Court by the Prudential Authority (PA) for the institution's liquidation. Ithala's clients' accounts were subsequently frozen earlier this year.

Responding to the news, 63-year-old retired teacher from the Department of Education in Durban, Nkosinathi Mhlongo, expressed his happiness about the progress in the matter.

Mhlongo stated that the bank assisted residents in many ways, as he had built his home with a loan taken from Ithala Bank at a low interest rate.

“I am happy that I will receive the little money I invested in the bank. I am ready and waiting for the call; if needs be, I am willing to be vetted, as long as I will be receiving my money,” he added.

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