Zimbabwe banking sector sound

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ZIMBABWE financial institutions have made significant progress in complying with international standards on capitalisation as the Reserve Bank moves in to stabilise the fragile financial services sector.

By Business Reporter

Presenting a Monetary Policy Statement on Wednesday, Reserve Bank of Zimbabwe acting governor Charity Dhliwayo said the banking sector remained sound. She added that undercapitalised banks had minimum systemic risk on the sector.

The central bank, since March 2012, has been monitoring the stability of banking institutions systems under parallel-run phase of Basel II implementation.
“A survey conducted in October 2013 indicated that most banking institutions have made significant progress towards full implementation of the framework although there are still some aspects of the framework which need to be enhanced,” Dhliwayo said.

Basel II is the commonly used term for the new framework for capital requirements for banks issued by Basel committee on banking supervision. The acting central bank boss said banking institutions were, therefore, required to ensure full adoption of the revised provisioning regime, set up operational validation frameworks and enhance outstanding aspects of their Internal Capital Adequacy Assessment Programs (ICAAPs).

She said the financial institutions should also do internal stakeholder training by the first quarter of this year.

Banking institutions, according to Dhliwayo, were facing challenges that include undercapitalisation, high levels of non-performing loans, poor earnings performance and liquidity constraints.

1 COMMENT

  1. With all the challenges mentioned above,
    jow can the banking sector be sound. Local banks are in trouble, there is a lot more money circulating in the informal sector than in the formal sector. It’s not possible to have a sound banking sector when the economy is not sound.

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