Question NW824 to the Minister of Finance
26 April 2024 - NW824
Siwisa, Ms AM to ask the Minister of Finance
With reference to his reply to oral question 186 on 20 March 2024, what (a) are the reasons that Ithala Bank has been denied a banking licence despite its productivity, (b) were the reasons for continuously giving the specified bank a banking licence exemption notice and (c) are the reasons that action is currently being taken against the bank after the bank has been successfully operating for many years?
Reply:
a) The Minister of Finance is aware that Ithala SOC Limited has submitted 2 applications, in terms of section 12 of the Banks Act, for authorization to establish a bank, one in November 2016 to the then Registrar of Banks (now part of the Prudential Authority of the South African Reserve Bank) and the second one in June 2023 to the Prudential Authority. However, as the Prudential Authority is the competent regulatory authority, neither National Treasury nor the Minister of Finance are involved in any aspect of the assessment of bank licence applications. Ithala, as the applicant, would have been furnished with the full reasons by the Prudential Authority, on why its applications were not successful.
b) Ithala was continuously issued with exemption notices for more than 20 years, as a temporary measure to allow it to work towards meeting all the licensing requirements, in terms of the applicable legislation. For the safety and soundness of all our institutions, and in the interests of fairness, banking laws and regulations should apply to all institutions that conduct banking business. All institutions that conduct banking business are required to meet all the licensing requirements for banks, in terms of applicable legislation. Compliance with the country’s banking laws is required to ensure that hard earned savings and deposits of ordinary citizens are protected.
c) In terms of the provision of section 1(1)(cc) of the Banks Act, the Minister of Finance is required to concur to the issuance of exemption notices by the Prudential Authority. As such, the Minister does not have the authority to issue exemption notices. The issuance of exemption notices is a regulatory function that is performed by the Prudential Authority, as an independent regulatory authority.