The South African Social Security Agency (SASSA) has partnered with First National Bank (FNB) to provide temporary relief to 65,000 social grant recipients impacted by the suspension of Ithala Bank.
This follows a provisional liquidation application filed against Ithala by the South African Reserve Bank’s Prudential Authority (PA), freezing over 257,000 depositor accounts, including those of SASSA beneficiaries.
Who us affected?
The frozen accounts include recipients of:
-Old age grants
– Social Relief of Distress (SRD) grants
– Care dependency grants
– Child support grants
– Disability grants
– Foster care grants
Temporary solution: FNB accounts activated
Most affected beneficiaries are in KwaZulu-Natal, with smaller numbers in Mpumalanga, Eastern Cape, Gauteng, Free State, North West, and Western Cape.
Sassa and FNB have established a three-month interim arrangement to ensure uninterrupted SASSA grant payments. Affected beneficiaries will receive temporary FNB accounts until they can nominate their preferred bank.
Key Slsteps for beneficiaries:
– Collect FNB bank cards from nearest branches between January 28 and February 4, 2025 (valid ID required).
– Rural outreach programs will assist beneficiaries in remote areas.
SASSA emphasized this is not a promotion of FNB
“SASSA is not advocating or promoting FNB as a bank of choice for grant beneficiaries. We appreciate their ability to step in when another participant in the National Payment System is struggling.
SRD grant delays warning
While most grants will proceed on schedule, SRD grant payments for January 2025 may face delays. SASSA confirmed a “special payment run” will rectify this ASAP.
Why did Ithala collapse?
The PA applied for Ithala’s liquidation after declaring it “technically and legally insolvent.” Ithala operated under a ministerial exemption, not a formal banking license. National Treasury intervened to protect depositors, offering a R2 billion guarantee to safeguard savings under R100,000.
Finance Minister Enoch Godongwana stated: “As custodian of depositors, I prioritised protecting those with savings under R100,000. The guarantee ensures their funds are secure.”
Political tension rise
KwaZulu-Natal’s government opposes the liquidation, accusing National Treasury of diverting the guarantee to “comfort commercial banks”. Economic Development MEC Musa Zondi claimed: “The minister is using the guarantee meant for Ithala to benefit commercial banks. This is injudicious.”
Finance MEC Francois Rodgers also alleged an unnamed commercial bank is “soliciting Ithala clients” during the crisis.
What’s Next?
– The Pietermaritzburg High Court will hear Ithala’s liquidation application on Friday, January 31 (2025).
– Beneficiaries have three months to switch to their preferred bank.
Sassa urges affected recipients to stay calm and follow instructions for card collection.
