HomeBusiness DigestRBZ moves to safeguard depositors' funds

RBZ moves to safeguard depositors’ funds

Roadwin Chirara

BANKS will no longer be allowed to include their foreign currency accounts when measuring their depositors’ book, the Reserve Bank of Zimbabwe announced on Monday.

The central bank said the decision was taken so as to minimise the level of risk on depositors’ funds.

RBZ governor Gideon Gono made the announcement during a meeting with local banking chiefs on Monday.

“The bank wishes to announce that from today (Monday), FCA deposit balances are excluded from banks’ pool of Deposit Protection premiums,” Gono said.

“This position has been taken in view of the minimal risks to depositors on their FCA balances which in reality are resident at the Reserve Bank.”

Gono also spoke against banks that continue to engage in what he termed “stray activities”.

He said these activities included departing from the core business of banking, which is a reflection of insatiable rent-seeking behaviour.

“Others in the market have, for instance, started publicly practising what, by all accounts, is wanton disregard for the Reserve Bank’s repeated warnings for banks to stick to their core business,” he said.

“It must be emphasised that whilst the Banking Act in its present reading allows banking institutions to engage in any other banking business, where there is intention to vary current operations into new areas, there is still need for the respective institution to officially apply to the RBZ for endorsement.”

Gono said the central bank would not remain idle while institutions strayed from their core business for whatever reason.

“The bank would like to once again strongly warn the market to desist from the temptation of wondering astray from their core banking business as a reflection of insatiable rent-seeking behaviour or intentions of gaining some social or political mileages,” said Gono.

He said his concerns had been raised by the continued disregard of the Banking Act by some financial institutions.

“Others in the market have publicly practised what, by all accounts, is wanton disregard for the Reserve Bank’s repeated warnings for banks to stick to their core business,” said Gono.

He said the move had been necessitated by the need for financial institutions to meet certain requirements in terms of capitalisation and asset liability requirements with the central bank.

“This requirement is necessary, as provision of certain products or engagement in specific lines of operations has far-reaching implications for the capitalisation requirements, among other asset liability realignment requirements,” said Gono.

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