One of the objectives of this column is to enhance our readers’ understanding of banking laws and regulations. We are keenly aware that availability of timely and accurate information is a precondition for the subsistence of a healthy banker-customer relationship and accordingly, this instalment deals with information issues. We examine section 39 of the Banking Act [Chapter 24:20] which deals with this particular issue in terms of the display of information in banking halls. We also get to learn how the Banking Amendment Bill of 2015 proposes to amend the Banking Act in this regard. Please note that this is general opinion which cannot be relied upon as legal advice.
Financial Sector Spotlight by Omen Muza You may have walked into many a banking hall and seen a framed document titled “Statement of Assets and Liabilities” hung on the wall together with licences and other related documents. If you thought that this was merely for decorative purposes, think again because it serves a very important purpose — to inform the banking public about the state of the bank at a given point. If you also thought that banks display this sort of information out of their own volition and benevolence, you are about to find out the real reason they do so. Banking Act [Chapter 24:20] — Section 39 Section 39 of Banking Act [Chapter 24: 20] addresses the need for banks to display certain information where banking business is conducted. This is what it says: At all times when it is open for banking business, a banking institution shall display in a conspicuous place in every building in Zimbabwe in which it carries on such business —a copy, in a form approved by the Registrar, of the latest statement it submitted to the Reserve Bank and the Registrar in terms of subsection (1) of section thirty-eight; and a copy, in a form approved by the Registrar, of latest statement or balance sheet and profit and loss account it submitted to the Registrar in terms of subsection (2) or (3), as the case may be, of section thirty-eight; and such other information as may be prescribed. Banking Amendment Bill —Clauses 19 & 25 Clause 19 of the Banking Amendment Bill, 2015 inserts three new sections in the Banking Act focused on consumer protection. Of these three, section 28D, which deals with publication of information by banking institutions, will require banking institutions to inform customers of their terms and conditions of business, particularly their charges and interest rates. Section 28E deals with issues of disclosure of information to customers by banking institutions, upon circumstances such as opening an account, extending credit to a borrower or issuance of a credit or debit card. This is what clause 28D, which is comparable to Section 39 in the current Act, has to say:
At all times when it is open for banking business, a banking institution shall display in a conspicuous place in every building in Zimbabwe in which it carries on such business—
- a copy, in a form approved by the Registrar, of the latest statement it submitted to the Registrar in terms of section 38(1); and l a copy, in a form approved by the Registrar, of latest statement or balance sheet and profit and loss account it submitted to the Registrar in terms of subsection (2) or (3), as the case may be, of section 38; and
- a notice setting out its interest rates on deposits and loans, and indicating the terms and conditions under which it accepts deposits and makes loans; and
- such other information as may be prescribed.
At least once very six months, a banking institution shall cause to be published in a newspaper circulating in each area in which the institution carries on banking business, a notice setting out the interest rates offered by the institution on deposits and loans, and conditions under which it accepts deposits and makes loans. So what will happen to section 39 of the Banking Act, following the proposed introduction of the new sections? Clause 25 will repeal this section, which, as already indicated earlier, will be replaced by the new sections 28D and 28E.
As you can see, the provisions of the law are very clear about the breadth and depth of information which customers can expect to get from their bankers in banking halls and other public media. What tends to make enforcement of these provisions difficult is the banking public’s lack of awareness of their information and allied rights. What do you think should be done to improve awareness of banking laws and regulations by the banking public?
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