HomeBusiness DigestChikura slams RBZ delay on troubled banks

Chikura slams RBZ delay on troubled banks

Deposit Protection Corporation (DPC) chief executive John Chikura says the Reserve Bank of Zimbabwe (RBZ)’s sluggish response to close troubled banks is hampering efforts to compensate depositors timeously and preserve assets of the distressed financial institutions.

Kudzai Kuwaza

Chikura told businessdigest on Tuesday that the delay by the central bank in withdrawing licences of struggling banks allowed shareholders and management at the sinking institutions to strip assets, leaving very little for affected depositors.

“The delays by the Reserve Bank in closing distressed banks give shareholders and management time to strip assets and by the time it (bank) is liquidated it’s a shell,” Chikura said, adding the RBZ needed to move swiftly when closing banks to protect the interests of depositors.

“Let me give you an example: when Interfin (Interfin Bank Ltd) went under curatorship in 2012 the gap was US$98 million but when it was liquidated last year the gap had increased to US$158 million. This was an unnecessary accumulation of US$60 million.”

Several banks have closed due to serious viability problems with Allied Bank and AfrAsia Bank being shut down this year.
Tetrad Investment Bank was placed under judicial management this year and faces closure.

Chikura said the DPC’s intention to hike the maximum insurable limit paid to depositors from the current US$500 to US$1 000 is being hampered by the increase in failed banks as well as the corporation’s low revenue base that has been depleted by compensation to depositors of various failed banks.

He said they have so far managed to pay 38% of the affected AfrAsia depositors as well as Interfin Bank Ltd (19%), Allied Bank (32%) Genesis Bank (68%), Trust Bank (39%) and Royal Bank (75%).
The first meeting of creditors and members for Allied Bank will be held on June 24. Chikuru urged creditors to submit their liquidation claim forms to the Master of the High Court at least 24 hours before the date of the meeting.

He said depositors of these institutions who have not yet submitted their claims should contact the DPC for reimbursement.

The DPC is an autonomous statutory body established in 2003 and is governed by the Deposit Protection Corporation Act (Chapter 24:29) to administer the Deposit Protection Fund and compensate depositors in the event of a bank failure.

Recent Posts

Stories you will enjoy

Recommended reading