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Others attributed it to astute managers at the helm of these banks who were able to turn around the fortunes of their companies from the heady days of the Zimbabwean dollar era when hyper-inflation reigned supreme.
However, it seems that the stellar performance by most banks has nothing to do with innovative banking products that attract clients and their money.
According to Finance Minister Tendai Biti banks are making their money from dubious service charges, which are scaring away people from depositing their money with financial institutions.
“The bank charges in this country are outrageous. We can not allow a situation where a client leaves his money in the bank and after three weeks it is no longer there. Fifty-five percent of the income from our banks is from non-interest rates and that is not banking,” Minister Biti said while addressing participants at a budget consultative meeting in Bulawayo last week.
The world over, the norm is that banks make money from lending. Interest from the loans would go towards the banks’ profits.
However, in Zimbabwe, most banks have taken a conservative approach to lending. They are not keen to advance loans to the productive sector as it is considered risky. A few are advancing salary-based loans to workers but the returns are not that much considering most companies are not paying workers on time thus their employees are disqualified from these loans.
This means that income from interest activities is reduced and to cover the gap, bank charges, which border on a rip off, are elevated and contribute to the bulk of the profits.
These unscrupulous practices have been going on for some time and regulatory authorities have in the past threatened to take action against offending banks.
However, apart from the threats, nothing has happened and the practice continues.
Which is why we hope that Minister Biti will now do away with threats and take decisive measures to ensure that the banking public is protected from greedy banks.
At a time when the country is faced with liquidity challenges, the country needs all the cash it can get. There are estimates that more than $3 billion is circulating outside the banking sector, money which could be used to boost the economy.
Our banks are not helping matters to attract this money by imposing heavy charges on withdrawals and in some cases deposits.
Since it is apparent that banks don’t want to heed the warning from Government to reduce their charges on their own and promote a banking culture, Government needs to set up maximum service charges which can be levied by financial institutions. These charges can be set using regional benchmarks but taking into account the special circumstances facing the Zimbabwean economy.
While we believe that market forces should determine the cost of services with little Government interference, banks have shown that they are irresponsible and need some guidance from the relevant government ministry.
We hope that the policy steps which Minister Biti promised to announce soon will go a long way in restoring sanity in the financial sector and protect consumers.
Online Reporter