The Sunday News
Gabriel Masvora and Ngonidzashe Chiutsi Business Reporters
THE Reserve Bank of Zimbabwe is coming up with a formula to calculate how Government can compensate individuals with Zimbabwe dollars locked in accounts after the country adopted the use of multi-currency more than six years ago.
This, together with efforts being undertaken by the Bankers’ Association of Zimbabwe to come up with low-cost income transaction accounts which will attract low bank charges, are part of broad-based measures to reinvigorate the culture of banking among the people, officials said.
Central Bank governor Dr John Mangudya told the Bulawayo business community on Thursday that something was being done to address the issue of compensating those with locked money.
He was responding to queries on why Government was seemingly committing itself to settling company debts incurred by the RBZ but ignoring individuals whose money was locked in banks when the country dollarised.
“Yes, something is happening behind doors. We are trying to come up with a formula to see how we can compensate people whose money was locked in the banks. It’s difficult because we do not know which exchange rate to use,” he said.
Dr Mangudya added that although there were people who genuinely lost their savings when the country dollarised, it was also difficult because the majority of those with huge balances are those who were “burning” money.
“Again we want to see how we can deal with such cases. I know it’s also difficult for banks because it’s expensive for them to continue running those accounts. We need to move forward as a country,” he said.
Addressing the same meeting Bankers’ Association of Zimbabwe president Mr Sam Malaba said banks were also trying to address the issue of bank charges after complaints from the banking public.
“Most of the banks are introducing low cost income transaction accounts. Each bank is going to introduce the product anytime where the charges are going to be low and this is going to solve the challenges faced by the clients,” said Mr Malaba.
He said the issue of high interests was also being tackled by RBZ and his organisation.
“The issue of bank charges and interest rates is a matter that we are in discussion with the RBZ,” said Mr Malaba.
The two institutions are also working together to clean the banking sector after a number of banks have folded or shown signs of capital stress.
At least 1 500 jobs have been lost due to the closure of some of the financial institutions.
Dr Mangudya said RBZ was engaging bank owners and their shareholders to come up with lasting solutions to the banking sector problems.
“We are addressing the challenges faced by the informal sector and our wish and objective is that by June this year we don’t want to have distressed banks in Zimbabwe. We want to ensure that the banking sector is viable. We want to improve confidence in the banking sector,” said Dr Mangudya.
He said they were putting a number of measures aimed at resolving the existing banking problems.
“We will introduce the lender of the last resort facility so that our banks can have money. We want to deal with these liquidity challenges,” said Dr Mangudya.
He also expressed concern over the bank charges and interests that were still high.
“As RBZ, our wish is to see interest rates go down as they are still high,” said Dr Mangudya.
He said because of the unfavourable banking environment, about 50 percent of the people in the
country had no bank accounts.
He said the RBZ was also going to be the lender of the last resort once it has finished cleaning the banking sector.
“We do not want struggling banks to take advantage of the facility.”
A majority of banks in the country are facing difficulties trying to meet minimum capital thresholds prescribed by the central bank.
The difficult macro-economic conditions have also made it difficult for the majority of the indigenous banks to secure fresh capital.
This has resulted in some of banks either being forced into liquidation or voluntarily surrendering banking licences and becoming automatic candidates for liquidation.
Interfin, Genesis, Allied Bank, Capital Bank and Trust Bank are some of such indigenous banks that have either closed or placed under liquidation.
A fortnight ago Tetrad Investment Bank Limited was placed under provisional judicial management after facing operational challenges.
Zimbabwe used to have a vibrant banking sector with merchant banks, investment banks, discount houses, commercial banks, building societies, which blended very well with micro-finance institutions, asset managers and pension funds.
However, after dollarisation banks have been struggling to attract new accounts as the public has lost confidence in banking after losing life savings when the country introduced the multi-currency system in 2009.
