With the state-capture inquiry about to kick off, the Bank of Baroda announced on Monday it was shutting down its South African branches.
The instruction is said to have come from the bank’s headquarters in India.
The bank, which provided banking services to the Gupta family when other banks would not, said its parent company was “rationalising” branches in international markets.
There was speculation at the weekend that it would exit SA.
Baroda said it would stop taking new deposits from March and cease operations altogether at the end of March.
The South African Reserve Bank said the registrar of banks was in talks with Baroda to ensure its orderly withdrawal to protect depositors. The bank had R2.6bn in deposits at the end of December, according to regulatory filings.
Manoj Kumar Jha, the bank’s South African acting CEO, declined to comment.
The latest developments come after the bank became ensnared in state-capture allegations through its association with the Gupta family, its companies and associates.
Baroda faced the possibility of closure arising from a directive the Bank issued after it fined Baroda R10m for breaching sections of the Financial Intelligence Centre Act.
Baroda was named in former public protector Thuli Madonsela’s 2016 report on state capture, which directed President Jacob Zuma to appoint a commission of inquiry to investigate whether any official or organ of state had acted unlawfully, improperly or corruptly by giving financing facilities to companies linked to the Gupta family. This included a R659.5m prepayment that Eskom made to Tegeta Exploration & Resources to acquire the Optimum mine that supplied coal to Eskom.
Baroda is to be investigated for its role in facilitating the transaction and its handling of funds belonging to Optimum’s mine-rehabilitation fund.
After a lengthy legal battle and a ruling by the High Court in Pretoria, Zuma finally appointed Deputy Chief Justice Raymond Zondo in January to head the state-capture inquiry.
The National Prosecuting Authority’s asset-forfeiture unit froze more than R110m in deposits held at Baroda, which it said were proceeds of crime related to the controversial Vrede dairy-farm project in the Free State — meant to empower poor community members.
According to the asset-forfeiture unit, the R110m was part of R220.2m paid by the Free State agriculture department to Estina, a company associated with Atul Gupta, for the project.
Very little of this money was used for its intended purpose. Some funds found their way to Atul Gupta’s niece Vega’s blockbuster wedding at Sun City, while other funds went to vehicle dealers and other entities belonging to the Gupta family.
Attempts to reach Eugene Nel, the curator who was appointed by the court on behalf of the asset-forfeiture unit, were unsuccessful.
By Moyagabo Maake for Business Live