SARB Moves to Liquidate Ditsobotla Bank Amid Governance and Insolvency Concerns

SARB Steps In: Ditsobotla Bank Faces Liquidation

The South African Reserve Bank (SARB) is taking decisive action to protect depositors as it applies for the liquidation of Ditsobotla Primary Savings and Credit Co-operative Bank (DCB). The case will be heard at the High Court on 29 August 2025, following a resolution earlier this month recommended by SARB and approved by the Minister of Finance.

DCB, headquartered in Lichtenburg within the Ditsobotla Local Municipality of the North West, was initially formed from the merger of three local savings and credit co-operatives: Aganang, Ikageng, and Itireleng. These co-ops originally served employees of Alpha Cement, Lichtenburg Municipality, and Lafarge Cement. Officially registered with SARB in March 2014, the bank had 1,452 members and reported unaudited total assets of R8.3 million as of May 2025.

Why the Bank Failed

Despite being able to pay creditors in the short term, DCB failed to meet legal liquidity and operational requirements, prompting SARB to place the bank in resolution on 1 August 2025. A deeper probe revealed serious weaknesses:

• Governance and control gaps: Internal systems and management practices were deemed inadequate and risky.

• Failure to implement corrective actions: The bank ignored recommendations to diversify its membership, reduce concentration risks, and train staff to manage operational and financial risks.

• Unsustainable business model: Assessments showed liabilities exceeded assets, and attracting new investors to recapitalise appeared unlikely.

Resolution practitioner Mr Anoosh Rooplal concluded that DCB is insolvent and unlikely to recover, making liquidation the most prudent path for depositors and creditors.

What This Means for Customers

While liquidation may sound alarming, SARB has assured depositors that payouts of up to R100,000 per qualifying depositor will continue through the Corporation for Deposit Insurance (CODI). Depositors holding more than R100,000 will retain claims against DCB for the remaining balance.

This move is intended not only to protect depositors but also to preserve DCB’s remaining assets for creditors and facilitate any necessary investigations into the bank’s operations.

Local Reaction and Broader Implications

News of the impending liquidation has sparked concern in Lichtenburg and surrounding areas, where DCB played a key role in local financial access. Social media threads reveal depositors sharing anxiety over their savings, though many have welcomed the SARB’s clear communication and the safety net provided by CODI.

For smaller cooperative banks across South Africa, DCB’s liquidation serves as a cautionary tale: strong governance, diversified membership, and strict compliance are crucial to survival in an increasingly regulated financial environment.

DCB’s story is a reminder of the delicate balance between local community banking and national regulatory oversight, a balance that ultimately aims to protect everyday South Africans from financial shocks.

{Source: BusinessTech}

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