Banks still mug loyal customers

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As the cash crisis worsens, banks have reduced daily withdrawal limits to as low as US$100, charging about US$5 per transaction and making a killing in the process.

IT is not easy being a bank in Zimbabwe these days. Consumers increasingly dislike them, shareholders are pressuring them and regulators constantly monitor them.

Zimbabwe Independent Comment

Clients are angry and agitated because they are being mugged; being robbed in broad daylight. Shareholders want higher returns. Regulators are becoming impatient with their extortionate charges. While the current liquidity crunch and cash shortages buffeting the economy are causing disruptive problems to the survival of companies, families and individuals, in fact economic activity, banks — which have also suffered due to panic withdrawals — are capitalising on the crisis to make money.

Since the problem started a few months ago, banks have reduced withdrawal limits from US$1 000 for individuals to as low as US$100. Companies used to be allowed to withdraw US$10 000, but that limit is now down to paltry figures. Some banks which allow their customers to take US$200 force them at ATMs to withdraw the money in two tranches if there are queues.

In the process, depositors are forced to make endless withdrawals — a client of Stanbic Bank, for example, now needs five days, a whole working week, to merely get US$500. Eventually clients pay a heavy price in bank charges which result from multiple withdrawals, overdrafts, or any of a wide variety of other banking activities.

Apart from paltry withdrawal limits and exorbitant charges, depositors have had to also grapple with long and chaotic bank queues and dysfunctional ATMs, which constantly run out of money. Banks had increased service charges by up to 570%.

Although the Reserve Bank recently forced banks to reduce the astronomical and unjustifiable fees, customers of financial institutions are still being fleeced as they are compelled to make endless withdrawals, use point of sales machines and make other electronic payment methods, multiplying the charges. Bank fees are now multiple, high and confusing. Regulators must intervene again.

Despite central bank governor John Mangudya’s recent intervention, the charges levied by some banks on various products and services still demonstrate unacceptable predatory practices by bankers.

At current levels, charges levied by banking institutions are way above salaries earned by the majority of financial entities’ customers, a situation which is detrimental to banks’ core business of financial intermediation. Banks need to put on a human face and desist from levying criminal service charges on their already struggling customers.

As things stand, people feel they are being ripped off by banks. Customers are gravely concerned about financial institutions exploiting them. So banks have got a challenge; they have got a lot of work to do to convince clients they have got their interests in mind, not that they only have profits at heart.

However, these problems are linked to the broader economic troubles engulfing the country. Banks must remember that, particularly during these turbulent economic times, the deep and enduring relationships they form with their clients are crucial to both their survival and clients’ financial convenience. Unfortunately, the value of these banking relationships has been too easily discounted or even ignored in recent years as banks chase profits at the expense of clients.

One thought on “Banks still mug loyal customers”

  1. Linus says:

    The USD banknote supply problem is also exacerbated as by constantly recirculating notes in the ZIM economy; these same notes become less and less fit for use and also less fit for use in ATM’s. So these banknotes will at a point need to be destroyed. So unless the country has bulk supply of USD banknotes being resupplied (which I doubt) then there will be sooner or later critical shortfalls which is what I think is happening now.

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