adminIn the 2013 national budget, Minister Biti proposed that any bank deposit of at least $1 000 held over 30 days should attract an interest rate of 4 percent per annum.
He said because most of the ordinary workers were earning salaries below the Poverty Datum Line (PDL), fiscal authorities were directing that no bank charges should be levied on any deposit of $800 and below.
The PDL is pegged at $568.
Citing failure of banking institutions to make reforms in terms of corporate governance, low capitalisation levels, high interest rates and bank charges, and low or no interest on savings, Minister Biti said Government was stepping in to regulate the issues.
Speaking by telephone from Harare yesterday, the Bankers Association of Zimbabwe (BAZ) chief executive officer Mr Sij Biyam said what Minister Biti announced were just proposals, which the association wanted clarified before a final position was adopted.
“These are just proposals, which are yet to be discussed and would not want to pre-empt our final position. As BAZ, there are certain positions which we want the Minister to articulate before the final decision is made.
“We have to put our input on what he has proposed and this will have to go through Parliament for debate,” he said.
Mr Biyam said the date to meet the fiscal authorities had not been set.
The banking industry has said high lending rates averaging between 18 and 25 percent per annum on the local market were a result of high cost of borrowing for on-lending resources from international financiers.
In his 2013 national budget, Minister Biti said: “The large discrepancy between deposits and lending rates, as banks fail to award positive incentives for savings deposits mobilisation while lending at sustainable rates, is a clear demonstration of market failure.”
He said moral suasion efforts by the Treasury and monetary authorities to have banks cultivate a savings culture among depositors and to price their loans and advances at sustainable rates have not yielded results.
“In this country, depositors actually lose money by depositing it as savings with financial institutions. Save for short-term deposits, savings accounts have virtually disappeared in our banking sector.
“The justification is the alleged short-term nature of deposits. The net result is a form of voodoo banking where bank charges eat up any deposits held in an account.”
As a result, Government is expected to come up with a Statutory Instrument (SI) informed by a Memorandum of Understanding between financial institutions and the Reserve Bank.
The SI whose effective date would be 1 January 2013 is also expected to codify the proposed measures on deposit rates.
Online Reporter