KZN govt applies for R2.4bn loan for Ithala depositors
The KwaZulu-Natal government says it's applied for a R2.4 billion loan from the National Treasury to help Ithala depositors.
Provincial Treasury's Nkosikhona Duma has explained that the loan is not to fund depositors' pay-outs but to secure the deposit book.
"The loan will serve as a security guarantee to Ithala’s deposit book until the entity acquires a banking license. The GPU is in the process of securing a banking partner to host Ithala’s depositors. Ithala will thus have time to restructure its business to apply for a full banking license."
Over 257,000 Ithala depositors have not been able to transact at the entity since mid-January.
READ: Expert blames mismanagement for collapse of Ithala
At that point, a Repayment Administrator had instructed Ithala to stop all withdrawals and depositors.
The RA's order followed an application by the Reserve Bank's Prudential Authority to provisionally liquidate Ithala after the bank was found legally and technically insolvent.
KZN Treasury says it believes it will successfully defend Ithala's case if the loan is in hand.
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