Vhembe district mayor Florence Radzilani has resigned with immediate effect over the VBS saga.
"I therefore tender my resignation with immediate effect. I would like to reiterate the fact that I have consistently communicated that I was not involved [in] VBS municipal investments, both officially and privately," Radzilani said in her resignation letter.
She said she was leaving the office with a clear conscience after being vindicated by two forensic investigations.
Radzilani is also the deputy chairperson of the ANC in Limpopo, and has been asked by the party to step aside from all political activities until her name is cleared.
She allegedly received an amount of R300 000. Her municipality reportedly invested R300m in the bank.
Radzilani previously claimed she not aware that the municipality had conducted any business with VBS Mutual Bank.
Her resignation was made as Limpopo's premier and the ANC in the province held a briefing in Polokwane where it was announced that 7 mayors implicated in the VBS scandal, including Radzilani, had been asked to resign after the Limpopo ANC Provincial Executive Committee took a resolution.
At the briefing Limpopo Premier Stan Mathabatha said a provincial investigation was launched in June to determine whether correct processes were followed when investing in VBS bank.
"In all these municipalities, it is recommended that disciplinary action be taken," Mathabatha said.
"It is also recommended that steps be taken against municipal managers and CFOs," he added.
Last month, Mathabatha said seven municipalities in the province were on the brink of insolvency and could be placed under administration after they lost hundreds of millions of rands in investments into VBS Mutual Bank.
The bank was placed under liquidation following an order by the North Gauteng High Court last month.
A total of 10 municipalities in the province invested with VBS. Three municipalities, however, withdrew their investments following instructions from National Treasury.