RBZ turns screws on banks

THE Reserve Bank of Zimbabwe (RBZ) has castigated banks for keeping huge sums of money with the central bank instead of lending it to the productive sector.

BY MTHANDAZO NYONI

Responding to questions from delegates attending the ZimTrade-Banks breakfast seminar held in Bulawayo last week, the central bank’s principal analyst for financial markets, Tapiwa Furusa, said banks were sabotaging the economy.

“We have got a challenge and this challenge I will have to say it whilst all banks are here. We have got a challenge with our banks. Whilst the Reserve Bank is doing all these things (availing funding facilities), you know what these banks are doing?” Furusa said.

“When you deposit your money into your accounts with them, they take that money, come and deposit at the central bank and at the central bank we don’t give them any interest. It’s zero interest, but they are happy to maintain it there.”

Furusa said banks were forgetting that their survival depended on industry.

“It’s you who will produce for them to remain operating. They will rather take all the money and keep it at the central bank. When we are saying Real Time Gross Settlement (RTGS) has gone up, it’s the accounts of these banks which are at the Reserve Bank which has gone up,” he said.

“They are holding huge balances at the Reserve Bank which they are not lending to you and the Reserve Bank has improvised to take from these RTGS balances and try to create these facilities so at least there is some production at the economy.”

RTGS balance increased from $954 million in 2016 to $1,732 billion in 2017.

Furusa, however, said that was not the mandate of the banks.

“I want to say it whilst they are here and also you are here so that you know that we are against what they are doing. We want them to promote production,” he said.


Furusa said an economy where the central bank intervenes every time was not the best. He said the mandate of the banks was financial mediation, taking money from surplus unit, giving it to deficit unit for production purposes.
“But these ones are taking from surplus and deposit at the Reserve Bank of Zimbabwe which is not what they are supposed to be doing,” he said.

Banks have been prudent in lending to curtail the default ratio which peaked to 20,45% in 2014. This resulted in the creation of the Zimbabwe Asset Management Company to buy secured non-performing loans and free the balance sheets of banks to be able to lend again.

The fear of non-performing loans has also seen banks investing in Treasury Bills as short-dated securities offer better returns and are as good as money.

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6 Comments

  1. If deposits are short term its prudent to keep the money with RBZ than lending them out and get into a liquidity crisis

    1. You are 100% correct there Tich. However my worry is are these RTGS Balances being used to finance projects or the budget deficit of the country mainly caused by the huge wage bill? Either way the option the banks are taking is the best option given the current market conditions

  2. agreed uyo weRBZ idofo rakadzidza

  3. tinei ganyani

    ma Banks should be innovative kana ma Non performing loans achiwandisa its better for them to buy land and invest in bulding because you will never go wrong. nguya yachinja yatave tave nehurumende itswa ichitungamirirwa navaMnangagwa vanoda kuvandudza upfumi hwenyika kuti vanhu vawane kugara kwakanaka. i pray kuti ED apinde mu office aedze kuti zvinhu zvigadzirike discipline idzoke muvanhu ne confidence yekuisa mari kuma banks

  4. Masvingo a Govere

    Tineyi Ganyani you are out of touch on the reality. ED is in the office already, what more do we expect from him when he has failed to settle things the past seven months he has been in the office. We need new brooms

  5. When depositors come for withdrawals, they don`t want to hear about the NPLs you incurred whilst funding the informal sector, you think various boards of directors would just make a plan to sabotage the economy for the fun of it. Lest we forget the RBZ wants them to maintain minimum capital requirements……the issue is to do with a government that doesn`t have proper regulations to govern economic atmostphere in Zimbabwe…there should be a visible paper trail for everything.

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