16 June 2019


Mahikeng municipality to strengthen revenue enhancement

by: Nthusang Lefafa   date: 20 july 2018

Following an announcement made
by the South African Reserve Bank that government will not
guarantee municipal and corporate deposits made to the embattled VBS
Mutual Bank, Mahikeng Local Municipality said it is going to speed up its revenue enhancement strategy.
Since 2007, the municipality has invested over R80 million in VBS Mutual Bank, which has now been placed under curatorship
by the Registrar of Banks.
Head of the Municipal Manager’s Office, Shimanyana Molongwa, told Semphete that the municipality would continue
monitoring the situation that the bank is faced with. He said the municipality would also be collecting all amounts owed to the municipality.
“We are going to make sure that during this period we collect all monies owed
to the municipality by government and households. We will also be implementing
water cuts to those who are owing services because last year the municipality
offered discounts and some people still did not come forward to settle their
accounts,” said Molongwa.

Reserve Bank Governor, Lesetja Kganyago, said municipalities “had no business”
depositing money in the troubled bank. He said the Reserve Bank had
sent out communication that municipalities
were only allowed to make deposits with commercial banks.
The Reserve Bank said those who have made retail deposits of up to R50 000
could access their funds through Nedbank and this started on Friday 13 July.
Retail deposits are defined as deposits in VBS by individuals, burial societies,
stokvels and savings clubs. 

In a statement, the Reserve Bank said once retail depositors have received their
new Nedbank cards, they could choose to either leave their money in their new
Nedbank account, withdraw all or part of the funds at any ATM or Nedbank
branch, or move the money to another bank account with any bank in South Africa.
Retail depositors may use their new Nedbank cards to make payments at any
retail store.
In addition, the Reserve Bank said: “To facilitate the smooth transfer of personal
and account data from VBS to Nedbank, VBS branches will not be able to provide
cash withdrawal services from start of business on Tuesday, 10 July 2018.
“VBS branches will remain open for queries, client education and loan repayments.
Retail depositors will, however, not be able to access their funds, not
even the daily R1 000 per individual and
stokvel, and R7 000 per burial, as is presently
the position”.
The Reserve Bank went on to say that
retail depositors or account holders who have more than R100 000 deposited in
VBS will only be able to access their deposits
up to R100 000 through their new
Nedbank accounts. “Amounts in excess of R100 000 will
remain as deposits in VBS. These deposits
will remain valid and depositors
may receive a portion of their amounts
above R100 000 in future, depending on

successes in recovering loans and other
assets due to VBS. This is, however, not
certain nor guaranteed,” it said.
According to the Reserve Bank, it is
estimated that about 97% of the 22 700
VBS retail depositors will receive all of
their money.
“We are mindful that some retail depositors
have larger amounts deposited in
VBS. Together with the Curator, the Reserve
Bank and Prudential Authority, we
will continue to work towards recovering
as much money owed to VBS as possible,”
it said.
Municipalities, larger businesses and
other corporate depositors will not receive
any of their funds at this stage as
these are not guaranteed, but will retain
their deposits in VBS.
The Reserve Bank has urged all customers
who have loans with VBS to continue
paying their loans as they are still
legally obliged to do so.
A forensic investigation led by Advocate
Terry Motau SC into the bank’s affairs is
expected to be completed by late August
or early September 2018.