Postbank’s Big Promise, Delayed: South Africa’s New State-Owned Bank Struggles to Get Off the Ground

When President Cyril Ramaphosa signed off on the Postbank Amendment Bill last year, many South Africans hoped it would mark the start of a new chapter in inclusive banking. The idea was bold: create a fully-fledged, state-owned bank aimed at delivering services to underbanked communities, especially rural and low-income South Africans.

But nearly a year later, the Postbank hasn’t even applied for a full banking licence.

A grand vision with no licence in sight

Postbank, which operated for years under the South African Post Office as a savings bank, was formally spun off in 2023 to become a standalone government-owned bank. The goal? Offer more than just savings accounts — add transactional services, loans, and even credit.

Yet despite all the political will and public attention, the South African Reserve Bank (SARB) has confirmed it hasn’t received any licence application from Postbank. This is a serious red flag for a bank expected to handle billions in social grant payouts.

Currently, Postbank functions as a Designated Clearing System Participant, which lets it process payments through tools like the SASSA Gold and new Postbank Black Cards. But without a proper licence under the Banks Act, it can’t legally offer a full suite of banking services.

That means all the talk of becoming South Africa’s inclusive state bank is, for now, just talk.

Public trust on the line

To add to the pressure, government has already begun urging social grant recipients to switch to Postbank Black Cards. These cards are intended to replace the previous SASSA Gold Cards and serve as the primary vehicle for billions of rands in welfare payments. But how can a bank be trusted with so much responsibility when it hasn’t secured regulatory approval?

The social media response has been understandably skeptical.

“Postbank can’t even get a licence but wants us to trust them with our grant money?” one user posted on X (formerly Twitter). Others have called for greater transparency, with hashtags like #FixPostbank and #GrantCrisis starting to trend during recent payout hiccups.

New board, old doubts

Minister of Communications Solly Malatsi recently concluded the application process to appoint a new board at Postbank, with candidates expected to have serious chops in governance, finance, and banking. But board experience won’t be enough if the institution can’t pass basic regulatory hurdles.

Applicants were expected to bring experience in everything from compliance and corporate law to project management and digital banking systems, a clear sign that the state is trying to professionalise the bank. But with no licence application submitted and growing scrutiny, the process feels like putting the cart before the horse.

Déjà vu: Ithala’s cautionary tale

The Postbank story is also unfolding against the backdrop of another state banking failure: Ithala SOC Limited. The KZN-based bank, owned by the provincial government, was recently slapped with a provisional liquidation order after failing to meet basic financial obligations. Treasury had to approve a R2.2 billion guarantee to protect depositors — a stark warning of what can go wrong when political ambition outpaces regulatory discipline.

Ithala’s most recent financials painted a grim picture: the bank is technically insolvent, unable to cover its liabilities. Its capital adequacy ratio is in the danger zone. Sound familiar?

Does South Africa really need another bank?

Critics argue that with a slew of private banks already operating in South Africa many with strong digital platforms and rural outreach creating another state-owned bank may be redundant. Others worry the state’s track record with managing large financial institutions leaves much to be desired.

That said, the original dream behind Postbank isn’t without merit. There’s still a massive gap in financial inclusion across South Africa. For people in villages where ATMs are rare and bank branches non-existent, a state-run service provider could be a game-changer.

But for that dream to work, Postbank must do the basics first, like applying for a licence.

Postbank was meant to be a new hope for state-backed financial access in South Africa. But delays, regulatory inaction, and growing public skepticism are starting to take their toll. Without clear timelines or accountability, what was once a promising vision for financial inclusion may end up as just another chapter in the long book of failed state ventures.

South Africans deserve better and so do the millions who rely on their grants each month.

{Source: BusinessTech}

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