Indian Rupee to be legal tender in Zimbabwe
By Staff Reporter
HARARE – The Reserve Bank of Zimbabwe (RBZ) announced Wednesday that it was adding the Indian Rupee to the basket of currencies to be circulated in the country. This it said was in view of the growing trade between the two countries.
In addition to the Botswana Pula, British Sterling Pound, Euro, South African Rand and United States Dollar, the central bank also added the Australian Dollar (AUD), Chinese Yuan (CYN), Indian Rupee (INR) and Japanese Yen.
The addition of four Asian currencies to the multi-currency system, brings to nine the international currencies circulating in the country.
In a statement, Acting Governor of the Reserve Bank of Zimbabwe Charity Dhliwayo also said Wednesday’s decision should put to rest the widespread speculation surrounding a re-introduction of the Zim-dollar.
Zimbabwe abandoned the use of its own currency in 2009 after world record inflation levels precipitated an economic collapse under the Zanu PF government. It was a coalition government in 2009 that introduced the multi-currency system that brought stability.
Monetary Policy Statement major highlights
• Banks’ $100 million capitalization deadline moved from 2014 to 2020.
• The country will continue with the use of multiple currencies.
• Chinese Yuan, Japanese Yen, Indian Rupees and Australian Dollars now accepted and used in Zimbabwe.
• The Reserve Bank will resume its traditional function as the banker to Government with effect from 31 March, 2014.
• As at 31 December 2013, total banking sector deposits amounted to $4.73 billion while loans & advances were $3.70 billion.
• Total banking sector assets as at 31 December 2013, were $6.7 billion.
• The loans to deposit ratio was 78.29 percent as at 31 December 2013.
• Capital levels will remain as per the thresholds obtaining in December 2012 ($25 million for commercial banks).
• Individuals constitutes the highest proportion of total lending at 23.80 percent
• The banking sector’s average non-performing loans to total loans ratio (NPLs/TLs ratio) stood at 15.92 percent as at 31 December 2013.
• Provision to criminalise bankers for negligence and fraudulent activities.
• Prohibits loans to insiders and related parties.
• Existing insider loans should not be renewed or rolled over.
• The level of total insider loans in the banking system was $175.3 million. Of these insider loans 66.97 percent was non-performing.
• The Reserve Bank will closely monitor compliance with the required maximum fixed asset ratio of 25 percent.