FINANCE minister Tendai Biti has threatened to introduce a new law compelling banks to comply with an agreed new interest rate regime lowering the cost of borrowing amid concerns that some institutions were flouting a sector-wide agreement signed last month.
Report by Bernard Mpofu
Presenting his monthly state of the economy report on Monday, Biti said the government was considering regulating the fragile banking sector.
Following public outcry over high service charges, the Reserve Bank of Zimbabwe (RBZ) and banking institutions signed a memorandum of understanding (MOU), which provides guidelines for the determination of interest rate margins and bank charges.
The MOU, according to the RBZ, took effect on February 1 after 75 days of negotiations.
Banks are now required to pay an interest of 4% for time deposits of $1 000 and above held over a period of at least 30 days.
The MOU also requires that lending rates at banks be subject to a maximum rate of more than 12,5% above each respective bank’s weighted average cost of funds.
Under this arrangement, banks will, with effect from today, charge up to 0,5% of cash withdrawal amount subject to minimum charge of $2,50 while ledger fees, maintenance and service fees will cost up to $4 per account.
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The central bank and the bankers also agreed to push for the mandatory use of debit cards. Automated teller machines, according to the MOU, will now attract a withdrawal fee of $2.
Point-of-sale machines will now attract a fee of between 10c and 50c while no charges shall be levied on cash deposits. The banking institutions also agreed to exempt senior citizens above the age of 60 from all bank charges, including maintenance fees, except where such accounts are used for conducting business- related activities.
“The reports that we are getting from the central bank as of the 1st of February 2013 to now is that whilst the majority of the banks are in compliance with this directive, a few are not,” Biti said.
“We will study the situation carefully.
“If the situation is that there is substantial non-compliance with the memorandum of understanding executed, then as government we will simply convert the MOU into a statutory instrument.
“This is not our intention, but we believe that everyone should be bound by an agreement that he or she signs.
“We will be monitoring the situation very, very closely.”
Bankers’ Association of Zimbabwe chief executive officer Sijabuliso Biyam said he was not aware of the errant banks.
“I’m not aware of banks which are not complying because from where I sit I have not received the names of any non-compliant banks. My understanding is that the banks are complying because in this MOU we agreed that banks that are not complying will have to face the music. It specifically states that there should be penalties,” said Biyam.
