TIME Bank of Zimbabwe has sued the Reserve Bank of Zimbabwe (RBZ) and the Registrar of Banks over their decision to cancel its banking licence.
Time Bank’s licence was cancelled last week following its placement under curatorship two
A joint notice by the RBZ and the Registrar of Banks said Time’s licence was cancelled because the bank no longer had the prescribed minimum amount of capital and resources. It said Time did not have net assets to safeguard creditors.
In papers filed with the High Court on Wednesday, Time said the cancellation of the licence was “premature, illegal and of no force or effect”.
Time Bank, which is represented by Mutamangira & Associates, wants the court to compel the RBZ and Registrar of Banks to reinstate its licence because the cancellation was in breach of the Banking Act.
The bank argues that under the Act, shareholders and directors of the bank are supposed to be given 30 days to respond to a proposal to withdraw a bank’s licence.
It said the action was unlawful as it did not give them a chance to lodge an appeal against the cancellation.
The court papers show that Time was given two days to respond.
The RBZ wrote a letter to Time on May 17 proposing to cancel its licence but effected the decision three days later, say the papers.
Time said the RBZ and the Registrar of Bank’s actions had undermined the authority of the Minister of Finance Herbert Murerwa who was supposed to hear its appeal before the licence could be withdrawn.
“The audacity and temerity to deliberately undermine the jurisdiction of the Minister of Finance is scaring to imagine,” said the papers.
It said the RBZ had disregarded the law with impunity.
“The very safeguards that the legislature put in place to curb arbitrary decisions and excesses by the Reserve Bank are being trampled in broad daylight and with impunity.”
The bank said the decision was suspicious and hurried because both Time shareholders and the curator were never informed on time.
The bank said the cancellation of its licence “smacks of the biggest cover-up in the history of the financial services industry in Zimbabwe”.
It further claimed that the decision was premeditated because of Time’s on-going legal battle with the central bank.
“There is no doubt in my mind,” the bank’s lawyer said, “that the cancellation of the registration is to avoid dealing with legimate issues raised in the appeal, which issues are fundamental to the resolution of what is otherwise a long standing situation of sour relations between Time Bank and the Reserve Bank of Zimbabwe.”
Time was in the process of challenging their placement under curatorship two years ago arguing that it was the RBZ which caused their problems after it effected a wrong interest on a foreign currency loan from PTA Bank.
They claim their problems started after the RBZ charged them interest of 70% instead of 7% .