HARARE - Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono has hinted that he may extend the June 30 deadline for financial institutions to meet the $50 million minimum capital requirements to a later date.
Gono cited the ongoing liquidity challenges and low economic growth as contributing factors to the central bank’s decision.
“We are going to relax (capitalisation deadlines) a little bit in the mid-term Monetary Policy Statement to take into account these developments,” he said.
The central bank chief said the extension has also been necessitated by exogenous factors such as elections and the hosting of the United Nations World Tourism Organisation (UNWTO) General Assembly which might affect the attraction of capital by financial institutions.
Zimbabwe’s economy continues to experience severe liquidity challenges while the impending harmonised elections have seen most potential financiers adopt a wait-and-see attitude.
Market watchers, however, believe that the uncertainty fuelled by the 51 percent indigenisation programme could be one of the main reasons for the decision, as both foreign-owned and local banks have been trying to court investment to meet the capital requirements.
Gono said in the interests of maintaining financial stability, the RBZ continues to monitor the performance and conduct of banking institutions and efforts to address capitalisation, corporate governance and other regulatory issues in the sector will continue.
“Banking institutions are urged to ensure that their operations are conducted in accordance with sound administrative and accounting practices and procedures, adhering to proper risk-management policies, and in compliance with all banking laws and directives issued,” he said.
The central bank chief reiterated his advices that the stability of any banking sector is a function of the cooperative efforts and goodwill of all stakeholders.
“And to this end, the Reserve Bank wishes to encourage all stakeholders to go about their banking business in the normal manner,” he said.
In July last year, the RBZ raised minimum capital requirements for commercial and merchant banks to $100 million from $12,5 million and $10 million, respectively.
The RBZ defended its move and said it was minimising systemic risks in the fragile financial services sector, after the collapse of Genesis and Interfin banks.
In August, banks then received a partial reprieve and were instructed to have raised $25 million by the end of last year, with the rest of the capital requirements to be raised by December next year.
The apex bank indicated that 67 percent of the banking sector had complied with the $25 million deadline set for last year. - John Kachembere