Biti told journalists in Harare yesterday his ministry had fruitlessly engaged the Bankers Association of Zimbabwe (BAZ) to consider lowering lending rates, which treasury felt were far higher than international rates, currently at around 3% on average.
“We are going to work on a framework in the coming few weeks to address the humongous distortions of crazy lending and non-existent deposit rates. We have tried to engage BAZ but they have produced nothing,” said Biti.
The government would soon amend the Banking Act, which would see banks involuntarily playing “the role that a bank in Zimbabwe should be playing”.
Biti said interest rates and other bank charges had all remained at levels which perpetuated the pre-multiple currency mindset at a time when the country faces an acute shortage of liquidity.
He said internationally, money was being sold at 3%, but in Zimbabwe, interest rates were as high as 30%.
“We would have no problem if deposit rates were also meaningful,” he said.
Deposit rates for demand and short-term savings accounts for the period ranged between 0,15% to 5% per annum. Long term deposits ranged between 0,10% to 18% against lending rates as high as 30%.
Biti said there was rising concern over the absence of serious initiatives in the mobilisation of savings in the financial sector, a development which would see government developing market-based initiatives to attract more savings into the formal banking sector.
He said the banking sector was reluctant to play its intermediary role of giving credit to local businesses.
“As we speak, we have over US$700 million sitting in banks’ vaults,” he said.
Biti said while he and Reserve Bank governor Gideon Gono had stuck their necks out for banks in the wake of the indigenisation onslaught, they felt that they were getting little support from them.
“These banks are operating like foreign banks being run by foreigners. They need to act like local banks that are foreign-owned,” he said.
Biti said after the flawed land reform programme banks stopped giving credit to agriculture –– a position which he said was no longer justified.
He said banks had the capacity to strategise and mobilise lines of credit.