The provisional liquidation application by the Reserve Bank’s Prudential Authority against the Ithala finance agency is expected to be heard in the Pietermaritzburg High Court today.

Earlier this month, the KwaZulu-Natal government requested a R2.4 billion loan from the National Treasury.

In a statement, the provincial finance department states that this is to serve as a security guarantee until the entity acquires a banking licence.

Since January 16, over 250 000 Ithala clients have not been able to withdraw or deposit funds, due to an application by the Prudential Authority to provisionally liquidate Ithala.

This was over claims of legal and technical insolvency.

The provincial government says it is working to secure a banking partner to host Ithala’s depositors. They say this will give Ithala time to restructure its business, to apply for a full banking licence.

VIDEO | Ithala Bank faces liquidation: Khaya Sithole weighs in