'Banking sector must uphold ethical conduct'

HARARE - Players in the banking sector must uphold ethical conduct in their dealings with members of the public to uphold confidence in the sector, the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said last week.

Presenting his maiden Monetary Policy Statement (MPS), Mangudya, the central bank chief said unethical practices by banks were responsible for public mistrust in the sector.

“The Reserve Bank noted with concern a number of unethical practices and indiscipline in the sector.

“The malpractices range from falsification of records, deliberate misclassification of loans, camouflaging the level of Non-Performing Loans resulting in under provision and control overrides to imprudent lending practices,” Mangudya said.

He added that the malpractices cast doubt on the fitness and probity of the banking officials involved.

“The business of banking is about trust and this calls for high levels of honesty and integrity on the part of bankers.

“The Reserve Bank calls upon banking institutions to uphold ethical conduct in their dealings with members of the public in order to maintain confidence in the financial sector,” he said.

However, Bankers Association of Zimbabwe (Baz) president, Sam Malaba, recently defended the high bank charges local banks impose on depositors, arguing the operating environment is hostile.

Malaba told industrialists at a recently held Confederation of Zimbabwe Industries annual congress that the main factor driving bank charges was the cost of money and the cost of doing business in Zimbabwe.

“The country has to appreciate the fact that the Zimbabwean situation is peculiar in its own way. Firstly, we have no currency of our own. We import cash at our own cost, transport it at our own cost and insure it at our own cost.

“Most of our branches are running on generators. So when you see the bank charges being high, appreciate these challenges we are facing,” said Malaba.

Zimbabwean banks on average pay an interest rate of at least 4 percent on term deposits of more than $1 000.

This is a direct result of a Memorandum of Understanding (MoU) signed between banks and the Reserve Bank of Zimbabwe last year, to reduce interest rates and bank charges.

Before the MoU, banks charged interest rates as high as 60 percent. In the same cases, one percent was charged for all withdrawal charges.

 

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