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The Consumer Council of Zimbabwe has hailed proposals by the Reserve Bank of Zimbabwe to amend the Banking Act so that shareholders, directors and senior managers of financial institutions who act negligently or fraudulently can be prosecuted. On Monday, CCZ director Rosemary Siyachitema told this paper that the proposed amendment would give depositors some measure of confidence in the banking sector.
“In the past few years consumers have had to bear the brunt of their funds disappearing in banks that close shop due to poor corporate governance, insider loans and negligent action by senior managers of banks,” she said.
“We hope that the amendment will enhance transparency in the banking sector and the entire economy and that would deal a blow to speculation and distortion in our economy.”
In her Monetary Policy Statement last week, RBZ Acting Governor Dr Charity Dhliwayo ordered banks to stop issuing insider loans.
According the central bank, last year insider loans totalled $175,3 million of which about $117,4 million (66,97 percent) were non-performing.
Dr Dhliwayo attributed the collapse of some banks to abuse of depositors’ funds.
“In addition, the ever-greening of non-performing loans has resulted in the understatement of the level of provisions for bad and doubtful debts, thereby overstating the respective institutions earnings and capital positions.”
Siyachitema accused banks of poor corporate governance.
“The banks failed to institute proper assessment of those they lent money to, whilst at the same time giving loans to each other within the bank prejudicing the ordinary banking consumer in the long run,” she said.
Bongani Ndlovu
Online Reporter