THE Deposit Protection Corporation of Zimbabwe (DPC) has come out in support of the increased capitalisation requirements for banking institutions in Zimbabwe, saying the move was necessary as part of critical measures to restore confidence in the banking sector.
Addressing delegates to the 38th annual congress of the Zimbabwe Association of Pensions funds (Zapf) in Victoria Falls, DPC chief executive officer John Chikura said following the erosion of banks’ capital bases, it became important to rebuild confidence in banking through a variety of measures, one of which was to strengthen capital positions.
Chikura said government had identified a cocktail of tools and strategies aimed at restoring confidence in the banking sector.
“Yes, we have seen number of things and measures being taken. In raising the required minimum capital levels for banks, the idea is to simply strengthen the capacity of banks in case something happens,” he said.
Chikura bemoaned the perception that the banking sector was now full of practitioners who lacked the right integrity levels and that people whom the public felt should be made accountable for bank failures were being allowed to walk scot free when depositors’ funds had been lost through recklessness.
“It is sad that when one steals a cow, he can go away for 9 years, but there are bankers who literally stole millions from depositors but are walking scot free,” Chikura said.
He said part of the problem lay in the justice delivery system, which he said was no longer very functional.
“It is amazing because when you look at our Companies Act, the measures to deal with outstanding cases are there, but they are not being implemented. It’s sad that the country is now at a stage where one now says why hire a lawyer when you can pay the judge?” he said.
Addressing delegates who said pension funds were not benefitting from the depositor protection cover because the DPC catered to depositors with small sums only, Chikura said his institution had been put in place by government initially to protect vulnerable groups who did not have sufficient levels of financial literacy to evaluate risks in banks.
He said institutional and high value depositors had access to information that the majority of depositors did not have and could move their funds from banks before they hit troubled waters.
The Protection System (DPS) is a deposit guarantee scheme which ensures that depositors are reimbursed part or all of their deposits in the event of a bank failure.
“It is common cause that one of the most vulnerable groups of depositors are pensioners, who risk losing their life savings in the event of bank failures,” said Chikura.