Cabinet has endorsed new minimum capital requirements announced by Reserve Bank of Zimbabwe governor Gideon Gono, but extended the capitalisation deadline by 12 months.
The central bank was also tasked to act on the high interest rates. Addressing a joint Press conference with Gono, acting Finance minister Gorden Moyo said the RBZ boss was summoned to Cabinet on Tuesday to clarify the $100 million capitalisation requirement for commercial banks.
“Cabinet and Treasury stand by and support the measures announced by the governor. The government is satisfied that the measures that the monetary authorities announced are both necessary and good for the economy of Zimbabwe as it seeks to position itself as a key economic player in the region and beyond,” Moyo said.
“Accordingly, therefore, all banking sector stakeholders and the public are hereby advised that government stands fully behind the recently announced Monetary Policy Statement and the phased capital mobilisation programme at the announced levels and urges everyone in the banking sector to comply and all Zimbabweans and stakeholders outside our borders as well as our co-operating partners to rally behind our efforts bearing in mind that the central bank stands ready to assist with directing all sector players in need of such technical or directional assistance.”
Moyo said Cabinet had also ordered the central bank to rein in banks amid concerns of a wide discrepancy between high lending rates and low interest on deposits. Banks were currently charging up to 60% interest annually on loans and 5% on deposits.
“Government is concerned with the issue of high lending interest rates and bank charges. We have asked the governor to come up with measures that ensure that depositors are protected. That is very important . . . I know that this is not sweet music to your ears,” Moyo said.
He extended the full compliance period by a year after Gono had initially said the banking institutions were expected to meet the varying capital levels by June 2014 in a phased capitalisation exercise.
Moyo said the new measures were expected to strengthen rather than “criminalise” locally-owned banks amid fears that undercapitalised banking units would either go bust or be forced into mergers.