National Treasury has assured the retail depositors of Ithala SOC Limited that their deposits will be protected by a government guarantee, subject to the conclusion of the necessary technical work.

"Following the Prudential Authority's application for provisional liquidation of Ithala SOC Limited, we understand that depositors may be concerned about the safety of their funds," National Treasury said on Friday.

The Prudential Authority has filed for the provisional liquidation of Ithala SOC Limited in the Pietermaritzburg High Court. This decision aims to protect approximately 257 000 depositors, with the appointed liquidator utilising insolvency laws to recover and distribute funds.

Ithala, which operated under a temporary exemption from the Banks Act, failed to meet the conditions required to obtain a banking licence. The exemption, granted by the Minister of Finance, lapsed in December 2023, leaving Ithala unable to continue deposit-taking activities legally.

Treasury said the technical work to be done includes providing a government guarantee to one or more banking institutions to ensure the accounts of depositors can be migrated timeously and funds can be made available.

"We are working closely with the Prudential Authority to ensure an orderly process that protects depositors' interests.

"While depositors will need to urgently make alternative banking arrangements, they can be assured that we will endeavour to secure their funds as far as is possible.

"National Treasury will provide further details about the process for accessing guaranteed funds following the court's decision on the liquidation application," National Treasury said.