Reading Time: 2 minutes

Hope For Stressed Consumers

For thousands of stressed Ithala Bank clients, not being able to access their savings has been frightening and deeply upsetting.

Fortunately, National Treasury stepped in to protect customers affected by the collapse of the bank, unlocking up to R2.2 billion to repay depositors and help restore access to their money.

What Happened?

Ithala Bank was a KZN based, state owned bank that focused on serving rural communities, stokvels, and small businesses.

Over time, the bank ran into serious financial and regulatory problems and was unable to meet the requirements set by banking regulators. As a result, the bank was eventually placed under curatorship, leaving many customers suddenly unable to withdraw their savings or conduct normal banking transactions.

Not ideal. But there was hope for stressed consumers and good news came that they would soon be able to get their funds.

FNB Appointed

To make sure depositors are paid safely and fairly, First National Bank (FNB) was appointed as what is known as the payout bank.

 

Customers will receive an official SMS telling them when to visit any FNB branch for verification. Once verified, their money will be paid out within two days.

Importantly, depositors do not need to open an FNB account and are free to transfer their funds to any bank of their choice. But remember no payouts will be made at Ithala branches. You have to go to FNB.

R1 Billion Already Paid Out

The process has been underway for about a month now.

FNB has confirmed that just over R1 billion has been paid out within 29 days of the process going live in December. FNB CEO Harry Kellan says reaching this milestone so quickly reflects a focused effort to restore customer access to funds in a secure and dignified manner. Payments are being made in phases, and customers are urged to wait for their official notification before visiting a branch to avoid long queues and confusion.

Depositors have until 2028 to claim their money, giving customers time to complete the process without pressure. Treasury says it is working closely with the KwaZulu-Natal government and the Prudential Authority to ensure the process remains smooth and secure.

Though the entire process is designed to help affected clients get their money back it does once again show the fragility of the banking sector and importance of regulators and authorities in making sure consumers are protected.