President Cyril Ramaphosa authorised the Special Investigating Unit (SIU) to investigate serious maladministration in connection with the affairs of the Ithala Development Finance Corporation in KwaZulu-Natal. Picture: Doctor Ngcobo / Independent Newspapers
After weeks of the banking sector in the spotlight, President Cyril Ramaphosa made no mention of transformation in the banking sector in his State of the Nation Address (SONA) on Thursday night.
This comes after this week, the Portfolio Committee on Trade, Industry and Competition, and the Standing Committee on Finance held a joint meeting in which all major banks (South African Reserve Bank, Investec, FNB, Standard Bank, Absa, and Capitec) appeared before them.
The aim was to understand their credit lending practices for production and consumption purposes and progress in contributing towards the transformation of the economy.
Additionally, Ramaphosa authorised the Special Investigating Unit (SIU) to investigate serious maladministration in connection with the affairs of the Ithala Development Finance Corporation in KwaZulu-Natal, focusing on tendering for the supply, implementation, and maintenance of an integrated banking solution.
Ithala Bank also faces impending liquidation.
Institute for Pan African Thought and Conversation director, Professor Siphamandla Zondi, said that in light of the challenges with Ithala Bank following closely after the collapse of the VBS Mutual Bank and the challenges with African Bank that it had to recover from after a period of time, and there were issues with Capitec Bank, which incurred a fine.
“The government is correct to be concerned about how you strengthen the banking system, because it’s such an important engine of growth, it’s now become a bigger engine of growth than mining for South Africa,” Zondi said.
“So we cannot afford to have any form of failure in that particular area.”
Zondi said that working with the Reserve Bank, systems should be strengthened to ensure the protection of the banking industry, and therefore protect people’s deposits and people’s finances and assets, and protect the very stability of the economy.
“The locomotive of the South African economy is in the banking industry, and through that, the locomotive of our expansion on the African continent is through the banking system, so it has to be strengthened,” Zondi added.
thobeka.ngema@inl.co.za