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Oliver Kazunga Acting Business Editor
THE Government has issued a stern warning to banking institutions that have already started hiking bank charges following the cancellation of a Memorandum of Understanding meant to put a lid on increasing bank products and services.The Ministry of Finance and Economic Development and the Bankers’ Association of Zimbabwe (BAZ) signed the agreement in January this year before it was terminated early this month.
The pact was made following concerns by different stakeholders that bank charges as well as interest rates on loans and deposits had become “unreasonably high”. Announcing the 2014 national budget recently, Finance and Economic Development Minister Patrick Chinamasa said:
“In the spirit of allowing market forces to determine the cost of banking products and service, the MoU was discontinued effective from December 1, 2013. I have however noted with concern the recent astronomical increases in bank charges by some of the banking institutions.
“In this regard, I would like to sternly warn such institutions that Government will not hesitate to regulate charges and interest rates if banks fail to self regulate.”
Banks are charging at least $2 per transaction on individual accounts.
The institutions are also charging high interests of up to 24 percent per annum on loans while not awarding any interest on deposits.
Analysts say despite the hike of bank charges by some financial institutions, stiff competition in the banking industry means it was no longer possible for banks to hike charges at willy-nilly as that was tantamount to driving such institutions out of business.
The bankers association’s president George Guvamatanga recently confirmed to New Ziana that some of their members have hiked bank charges following the cancellation of the MoU with Government.
Guvamatanga said the association, which was self-regulatory, would take measures if any banks were found to have hiked their fees.
It is believed that the banking sector has lost more than $70 million between January and November when the MoU was implemented.
Meanwhile, Minister Chinamasa has bemoaned the absence of an inter-bank market saying this meant that some financial institutions remained unavailable to deal with shortages (funding) at others resulting in periodic gridlocks in Real Time Gross Settlements.
“In view of the above, I propose to introduce a $100 million interbank programme supported by an international bank, the African Export Bank, as a guarantor with effect from April 1, 2014. The inter-bank market is a necessary first step or first resort to building confidence within and amongst the local financial institutions, that way overcoming the liquidity problem as banks trade with each other,” said Minister Chinamasa.
Online Reporter