In a bid to ease the interbank Foreign Currency Account (FCA) transfer hurdles, the Reserve Bank of Zimbabwe (RBZ) has suggested the formulation of a settlement bank, which it will oversee.
In October 2018, the RBZ directed banks to effectively operationalise the ring-fencing policy on Nostro accounts, by separating FCAs into two categories, namely Nostro FCAs and RTGS FCAs. The fixed exchange rate of 1:1 was maintained.
However, the move complicated trade between banks and customers since forex transfers by banks are made using funds held in foreign offshore banks.
While the move by RBZ will come as a reprieve to banks as implementation of local bank to bank FCA transfers had been a challenge, Anti-Money laundering issues may become a concern for correspondent banks, if volumes increase significantly.
Also the only platform available for interbank transfers is that of Real Time Gross Settlements (RTGS). The central bank, in a Concept Note said it has come-up with a proposal as a solution to deal with this challenge.
“There are local agencies / companies which are funded in hard currency but would like to effect payments to local beneficiaries through an electronic platform as opposed to current arrangement where they have to either withdraw cash or undertake Nostro transfers. The absence of a settlement arrangement is inhibiting easier movement of payments from one local bank to another,” RBZ stated.
Stanbic Chief Financial Officer Solomon Nyanhongo recently said the situation now increases the “risk” with corresponding banks.
“Each local bank has a foreign bank that they bank with, for instance. Therefore moving FCA funds from Stanbic Bank to ZB Financial Service Bank entails sending information via the United States of America where it goes through the exchange process there. It will then be transferred back into the same country and credited as a nostro receipt.”
