Waive charges, Mangudya tells struggling banks

By NDAKAZIVA MAJAKA

HARARE – Struggling banks must stop charging fees on depositors who are failing to access their funds, the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has said.

He said the institutions should not charge “for services not rendered”.

“When clients cannot access their money in the banks, it is not prudent to be charging bank charges because essentially the whole purpose is defeated,” the central bank chief told delegates at the Annual Banks and Banking Survey Awards recently.

Mangudya said the charges were prejudicing depositors.

On average, banks charge $10 monthly service fees and a minimum $5 on withdrawals per transaction.

This comes as some local banks are facing solvency challenges, resulting in them limiting withdrawals, and forcing depositors to make several withdrawals in order to access significant amounts.

According to the Depositors Protection Corporation (DPC), as at June 2014, a total $15 million belonging to 9 000 depositors was locked up in three banks.

Of the $15 million, DPC has paid $450 000, with each depositor receiving $500 at a time.

Under the current arrangement, depositors — individual or corporate — can only get a maximum of $500, with the balance being settled through the liquidation process, which often drags on interminably.

Recently, Mangudya said troubled Tetrad Investment Bank Limited (TIB) must honour its obligations to creditors and depositors.

The bank, which is failing to meet depositors’ withdrawals and pay off matured investments, entered into a scheme of arrangement with creditors as sanctioned by the High Court in September 2014.

The payment plan was recently extended to January 2015.

“What we are saying as the central bank, as enshrined in the Banking Act, is that we cannot have them continue adding to the problems they have…. otherwise maybe the other depositors might also not get their money,” he said.

This was after the central bank ordered TIB to halt banking activities — deposit taking and issuing loans — with immediate effect.

This comes as the RBZ has cancelled licences of several banks, including Royal, Trust, Genesis, Renaissance and others due to capitalisation and corporate governance issues.

Mangudya added that financial institutions had to be flexible when it came to lending, as local companies needed support.

“Without lending money to companies, the economy cannot grow,” he said.

The central bank chief also revealed that about 40 percent of the money circulating in the system was unbanked.

“Zimbabweans are externalising funds. Externalising funds from the nation shows a lack of confidence and discipline in our banking sector, which is not healthy for any economy,” he said.

Mangudya said most of the deposits banks hold are short term, with long term deposits only accounting for 19,6 percent of total deposits. Daily News