Understanding the Banks Act exemption: MEC Zondi’s insights on Ithala

KwaZulu-Natal Economic Development, Tourism and Environmental Affairs (Edtea) MEC Reverend Musa Zondi has discussed issues surrounding the Banks Act exemption and the banking licence and how these affect Ithala SOC Limited. 

Zondi discussed the two topics during a media briefing called by the KZN government, led by Premier Thamsanqa Ntuli. Ithala SOC Limited CEO Dr Thulani Vilakazi was also present. 

Zondi explained that there is a provision in the Banks Act for an exemption to be granted to certain institutions, such as Ithala SOC, to operate as a fully-fledged bank without having to acquire a banking licence. 

“That has been the case from day one until the powers that be decided that they were no longer going to grant it,” Zondi said. 

“Denying extending the exemption to Ithala SOC may as well cause an amendment to the Banks Act to do away with the exemption regime.”

Zondi said they are making Ithala operational because they are working within the law governing the banks in South Africa.

He said he has been a parliamentarian since 1994, and from 1994, there has been a persistent call from parliamentarians that a state bank should be established. 

“There has been no success to date. Ithala is the only, if you like, existing state bank which has been successful,” Zondi said.

“So why kill something that is already successful?”

On Ithala’s acquisition of a banking licence, Zondi explained that the reason they needed to acquire a banking licence is to comply with the current situation where the Prudential Authority has withdrawn the bank's ability to operate. 

“As parliamentarians, when we drafted that Act we drafted it with state institutions like the land bank and others (in mind), will they need a commercial licence, do you need to privatise them. No, you don’t need to privatise them and therefore that exemption clause was put in there,” Zondi said.

thobeka.ngema@inl.co.za