RBZ engages banks on costs

PHILLIMON MHLANGA

The Reserve Bank of Zimbabwe (RBZ) has engaged local banks over high transaction costs which are eating into Zimbabwe’s long-suffering depositors’ already low income, governor John Mangudya has said.

Consequently, while all other sectors are teetering on the brink owing to the fragile economy, the financial institutions have thrived, according to recent financial statements.

And this is achieved through usurious charges to vulnerable depositors.

Mangudya warned that the punitive bank charges could further diminish confidence in the turbulent financial services sector, which is critical in allocating resources in an economy.

“We spoke to the Bankers Association of Zimbabwe (BAZ) about the high bank charges last week. They promised that they are going to come back to us,” Mangudya said.

With the lenders’ preferred income, their interest income, going southwards, punitive charges have translated into jaw-dropping margins for the banks, and significantly huge costs for depositors.

Overall, all banks have increased their transaction charges by huge margins.

Last year, most banks were charging withdrawal fees of about ZWL$$3 for withdrawals made in banking halls and ZWL$2.50 for withdrawals done on Automated Teller Machines for cash up to ZWL$1000.

But now, depositors are now parting with ZWL$30 for a withdrawal of up to ZWL$1 000, according to a snap survey conducted by Business Times this week.

To withdraw the same amount from an ATM, banks are charging on average about ZWL$20.

But, most banks are not feeding the ATMs with cash, forcing depositors to withdraw cash from the banking halls where withdrawal charges are higher.

Most banks are also charging a monthly maintenance fee of at least ZWL$50. Last year, banks were charging on average ZWL$10.

A balance enquiry is attracting about ZWL$5 from about ZWL$2 last year.

The lenders charge at least ZWL$30 for transfers through ZIPIT.

Several bank executives who spoke to Business Times this week said the harsh operating environment has forced the lenders to increase charges to keep their units viable.

Efforts to get a comment from the Bankers Association of Zimbabwe (BAZ) president, Ralph Watungwa were futile.

The Consumer Council of Zimbabwe has described the situation confronting depositors as “very distressing”.

Analysts warned this week that the situation could undermine efforts to encourage domestic savings and rebuild the shattered economy as the astronomical charges were eating into depositors’ already low incomes.

They said pressure was mounting on banks.

“Banks are under pressure because borrowers are struggling to pay loans at the moment. However, the sharp rise in service charges is a bitter pill to swallow for the banking public,” an analyst who preferred not to be named told Business Times.