The catastrophic consequences of the freezing of KwaZulu-Natal development finance company, Ithala, is of its own making. Thats been the argument of the Reserve Banks Prudential Authority, and the repayment administrator for Ithala, before a full bench in the Durban High Court.
They are applying for leave to appeal a ruling in May that Ithala be allowed access to its bank accounts to continue its non-deposit taking business pending the finalisation of an application for its liquidation.
These steps come after Ithala continued to take deposits after its exemption from the Banks Act lapsed at the end of 2023.
Ithala argued in the Pietermaritzburg High Court in March that it cannot pay staff salaries, pay insurance premiums on its assets, or hire security guards to look after their branches and the money held there. Thats after repayment administrator Johannes Kruger froze its bank accounts in January after an application for the institutions liquidation was filed.
Judge Muzi Ncube granted Ithalas application in May, that it be allowed to continue its non-banking functions and given access to its bank accounts until the courts decide whether the institution must be liquidated to pay back depositors.
