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RTGS bleeds banks

Shakeman Mugari

THE crisis with the central bank’s Real Time Gross Settlement (RTGS) payment system is costing the banking sector close to $5,2 trillion per day in

interest payments to clients whose transactions would have been delayed.

Bankers said the system, which should ideally be instant (real time), is now costing financial institutions which are forced to compensate clients whose payments would have been delayed.

The RTGS system has been experiencing problems for the past three months. Investigations by businessdigest revealed that the system has been down an average two days a week.

Just last week the system collapsed on Friday and Saturday. It was down on Monday this week and a greater part of Wednesday. The cost to banks has been huge.

On average the whole banking sector pushes transactions worth $162 trillion through the RTGS system everyday.

Each commercial bank pushes between $12 trillion and $14 trillion worth of RTGS transactions every day.

If the system does not work for one day it means that transactions worth $162 trillion would not have been processed.

That means the flow of money in the economy would have been affected because transactions between buyers and sellers would not have been completed.

The hyperinflation environment means that any delay in payment will cost companies money. This translates to a cost to the whole economy.

When the system collapses banks are forced to pay the affected clients at the overnight interest rate of 1 200%.

The problem however is that banks are picking up the costs even though they are not to blame for the crisis in the system. Banks are merely users of the system which is owned by the Reserve Bank of Zimbabwe (RBZ).

The system only works when the Tel*One link is operating.

For example, when a CBZ client instructs the bank to transfer money to Barclays the instruction will be routed through Tel*One’s system which is used by RTGS.

The instruction from CBZ will be carried by the Tel*One line to South Africa from where it is relayed to Brussels in Belgium.

From Belgium the instruction will be routed through the same system back to Barclays for the transaction to be processed.

The problem however arises when the system collapses along the way because banks will not be able to communicate.

The problem, experts say, lies with the Tel*One’s telecommunications infrastructure which has virtually collapsed because the parastatal is thin on both financial resources and skills to deal with problems in the system.

The power outages have not made things any better for the system.

Tel*One is unable to buy fuel to power the generators at its various bases along the line.

Analysts however said the bigger problem is that the system is too old to sustain the increased traffic that is coming through the RTGS system.

“The problem will get worse unless the whole system is revamped. The problem is that Tel*One does not have the money and the RBZ is still dragging it feet,” said a chief executive of a commercial bank.

“There will come a time when whole system will completely collapse. When that happens there will be chaos in the banking sector and the whole economy,” he said.

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