It was way back in 2004 at the height of Zimbabwe’s first financial crisis that resulted in the closure of a number of banks including my bank at the time, Time Bank.
Unfortunately for me, the bank was closed on the very day my salary had gone through.
Nobody had warned me of the impending closure, only to be greeted by a notice upon visiting the bank, “Closed by the Order of the Reserve Bank”.
There was, however, nothing I could do, but to wait patiently in the hope that I would recover my money as there was no institution protecting depositors.
The recent closure of two banks by the central bank a fortnight ago has brought to the fore the role of the Deposit Protection Board.
Eight banks — Time, Trust, Royal, Barbican, CFX, Intermarket, ReNaissance and Interfin — have been placed under curatorship in the past eight years, while Genesis surrendered its licence to the Reserve Bank of Zimbabwe (RBZ).
The Deposit Protection Board (DPB) is an autonomous statutory body established under the Banking Act Chapter 24:20, to administer the Deposit Protection Fund (the Fund).
Under the Deposit Protection Corporation Act, the board is supposed to establish the deposit protection fund for the compensation of depositors in the event of financial institutions becoming insolvent.
Official figures indicate that as of March this year, the board had a paltry $1,9 million in its coffers and ideally it would require$12,5 million to absorb the shocks emanating from bank failures.
It is interesting to note that the funds required to recapitalise this institution are equivalent to the minimum capital requirements for commercial banks.
However, since the closure of the two banks recently, the deafening silence of the entity on the way forward is worrying to say the least.
The questions depositors are asking are, was Depositors’ Protection Corporation (DPC) aware of the challenges at the two banks?
If so, what did it do to protect the interests of the depositors whose hard-earned money could have been misused?
Why has the institution not issued a public statement assuring the public that they would be reimbursed?
Did this happen because the institution had decided to go about its business quietly behind the scenes then inform the affected depositors when everything is in place?
Whatever the reason might be, the affected depositors need to be assured that their case is being looked into and that they would recover their funds.
Those who have not been affected directly need reassurance that they can continue with their normal banking business with their respective banks in the full knowledge that in case of emergency, the funds are safe.
It is unfortunate that the closure of the banks could have also dampened confidence in the fragile financial services sector making it difficult for other banks to tap into the informal sector where an estimated $3 billion is circulating.
It is therefore critical that with or without money to compensate the depositors, the DPC should stand on its ground and make its position clear.
I can’t agree more with the Consumer Council of Zimbabwe (CCZ) that access to stable, secure and fair financial services is important for consumers not least in the context of the current harsh economic climate where every dollar that one earns counts.
Only late last year, past president of the Bankers’ Association of Zimbabwe John Mushayavanhu urged the Finance ministry to recapitalise the Deposit Protection Board, to increase confidence levels.
“That is one way we can attract the unbanked population,” Mushayavanhu said then.
It has also become critical as suggested by CCZ that the government should expedite the passage into law of the Consumer Protection Act, a comprehensive consumer Act which will harmonise all existing consumer protection legislation.
We eagerly wait for the day depositors will be reimbursed their money, only then can we safely say the banking sector was now on a solid ground.
For views and comments, email: firstname.lastname@example.org/ or follow me on twitter@mmafira