The South African Reserve Bank has placed VBS Mutual Bank under curatorship with immediate effect.
VBS came under the spotlight in 2017 for lending former president Jacob Zuma R7.8 million to pay his Nkandla debt.
The Reserve Bank says VBS failed to act, despite repeated warnings that it should not be taking unlawful deposits.
It is the first SA bank to be placed under curatorship since African Bank in 2014.
Speaking to Bongani Bingwa, Professor Jannie Rossouw, Head of the School of Economic & Business Sciences at Wits University, said the bank shouldn't have taken deposits from municipalities.
The Municipalities Finance Management Act is clear when it says municipalities may only put deposits with banks registered in terms of the Banks Act of 1990, so by law deposits with mutual banks are excluded.— Professor Jannie Rossouw, Wits University
Concerns have been raised by the EFF - and others - about whether curatorship measures could have been avoided, and whether this is an example of black business not getting the support it requires.
This could, of course, have been avoided if VBS had not taken deposits in contravention of the legislation in the first instance.— Professor Jannie Rossouw, Wits University
To listen to the full interview, click below.