Biti to announce changes to the Banking Act

HARARE - A cocktail of new measures in the banking sector to be deliberated by Cabinet will see a complete overhaul of the Banking Act before year-end, Finance minister Tendai Biti said.

Presenting the state of the economy address on Thursday, Biti said his ministry — which recently gazetted the amended Securities Act, Microfinance Bill and lately approved the final draft of the Incomes Tax Bill — will soon present to Cabinet major amendments to the current Banking act.

“I also want to warn you that we are now about to take to Cabinet major amendments to the Banking Act that will see the complete overhaul of the current Banking Act,” Biti said, adding that the move will also see the introduction of offshore banking in Zimbabwe as previously announced in the 2012 national budget.

“….One of the things that we would like to see is Victoria Falls being an offshore banking station, so the bill is coming,” said Biti.

Biti’s comments come as some banks could face challenges in meeting the new minimum capital requirements which require commercial banks to be capitalised to the tune of $100 million by June 2014.

It’s also on the back of unsavoury banking practices taking place in the industry prompting Biti’s ministry and the Reserve bank of Zimbabwe (RBZ) to adopt some measures in all regulatory frameworks that govern financial services.

“As you know we have been very busy in the reform aspect...Our amendments to the Securities Act have been gazetted, we are also very pleased that the amendments to the Microfinance bill have been gazetted,” said Biti, adding that Cabinet had approved the final draft of the Income Tax bill and hoped it would be gazetted in a fortnight.

Biti said they had also crafted a bill that would see the creation of a syndicated fund in collaboration with the private sector to enable the vehicle to assume commercial banks’ non-performing loans and rescue depositors and also pave way for the restoration of RBZ’s role as lender of last resort.

Under the proposed structure, banks would be allowed to sell their non-performing loans to the vehicle under commercial terms, allocating collateral and other rights linked to the loans.

Biti added that funds were already in place as well as the private partner and what was left was to consult various stakeholders such as the World Bank, International Monetary Fund, RBZ and the Bankers
Association of Zimbabwe before Cabinet approval.

The bond will be issued through an Act of Parliament.

Government would impose a two percent levy on the total risk weighted banking assets for a period of ten years and as the industry assets increase, the levy would be reduced over time.

The amendments to the Securities Act have seen the inclusion of new regulations which will ensure the setting up of the Central Securities Depository (CSD) — an electronic securities settlement system in order to make sure the equities market complies with international best practices and also force the demutualisation of any capital market in Zimbabwe to ensure accountability.

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