THE Reserve Bank of Zimbabwe (RBZ) has come up with measures to minimise the adverse impact of the COVID-19 pandemic on banks and microfinance institutions (MFIs) through credit relief, loan restructuring and microfinance institutions licensing.
BY Tafadzwa Mhlanga
In a statement, the apex bank said the measures would be applicable to institutions that were performing before the impact of the COVID-19 which has resulted in more than 2,5 million infections and more than 170 000 fatalities globally.
“In view of the potential adverse impact of the COVID-19 pandemic on the performance of certain segments of the real sector and the related effect on repayment capacity of borrowing clients, banking institutions and MFIs are encouraged to review their portfolios and engage eligible clients with a view to institute strategic measures to restructure the existing facilities,” read the statement.
“The relief that may be provided to clients shall only be applicable to facilities that were performing prior to the challenges associated with the COVID-19 pandemic. Such restructured facilities shall continue to be considered as performing after the relief and no additional provisions shall the charged,” it said.
The central bank added that the banks and microfinance institutions were required to submit COVID-19 business impact analyses to the central bank that shows the anticipated losses by June 30, 2020.
“Unless an institution has done an adequate assessment of anticipated losses and has made sufficient provisions, as well as complied with the prudential capital requirements, it shall not distribute any dividend or pay bonuses to its executives.
“In order to facilitate a comprehensive assessment of the impact of the pandemic on the banking and microfinance sectors and enable the authorities to institute appropriate responses, the institutions are required to submit COVID-19 business impact analyses by June 30, 2020. The RBZ may review the deadline for application of this circular, having regard to the evolution of the effects associated with the COVID-19 pandemic.”
Against the background of the COVID-19 pandemic, microfinance institutions whose one-year licences are due to expire or have expired, will be granted up to 180 days post the expiry to apply for registration in line with the Microfinance Act [Chapter 24:30].