Banks plead for cash

HARARE - Zimbabwe's financial institutions are pleading with deep-pocketed clients to supply them with cash aimed at replenishing their nostro accounts as the country continues to grapple with a biting liquidity crunch.

Nostro accounts are accounts held in a foreign country by a domestic or local bank which are used to facilitate settlement of foreign exchange and trade transactions.

Bankers Association of Zimbabwe (Baz) president Charity Jinya yesterday told a Zimbabwe National Chamber of Commerce breakfast meeting that financial institutions were now operating on a “know your customer” basis to determine where to get cash for day-to-day business.

“There are two sources for banks to provide cash, which are export receipts or cash already in circulation . . . So in the current conditions where cash is not readily available and banks know that a customer has cash, banks will ask for the money so the two can add up so the cash continues to circulate,” she said.

This comes as Zimbabwe is presently reeling from cash shortages that have seen the central bank intervene through various measures to stimulate production and retain cash within the country’s borders.

Jinya was responding to questions on whether it was ethical for banks to ask for cash from clients so that they can service nostro balances as well as honour client international obligations.

Reserve Bank of Zimbabwe governor John Mangudya said the country was caught up in a unique situation that warranted desperate measures.

“Yes, it makes perfect sense for banks to ask for cash for nostro accounts. They are doing this because there is no cash in circulation, given the high externalisation rates. The money is not moving so banks cannot perform transactions like Telegraphic Transfers (TTs). They are now saying give us the cash to deposit in nostro accounts, which is very natural. There are no overdrafts. The country has been isolated for so long so this is the only way banks can get money,” he said.

Jinya — who is also MBCA Bank managing director — said given the present cash shortages on the market, banks were going to regulate withdrawal limits below the $1 000 prescribed by the central bank as they saw flexible.

“Given the cash shortages, every bank will look at its position and ration from the $1 000 if there is need on a basis of know your customer.

“We are part of an international community that requires us to be certain that the transactions we process are bona fide.  So clients must not be surprised when they get limits lower than the $1 000 or when transactions take longer and questions are asked for seamless processing of transfers,” she said.

The Baz president said the delay in TTs was a direct result of the country’s trade deficit which has seen Zimbabwe importing more than it is exporting.

“When we have more imports than exports simple arithmetic indicates there will be delays in processing offshore transfers,” Jinya added.

Comments (8)

AM SURE ALL BANKS KNOW THE ONES WHO ARE HIDING ALL THE CASH UNDER THE MATTRAS.

jack - 12 May 2016

Pleading for cash from who ? Time to bring out the cash you have stolen. Its now or never. Zwamakadya zwakwana. Something has to give in for sanity to prevail.

Masamba Akareyo - Tanganda - 12 May 2016

"The country has been isolated...." no Mangudya, Zanu PF and its president have isolated Zimbabwe by embarking on unworkable, destructive projects which have sunk us to where we are. Don't blame the world for self-inflicted misery.

Sagitarr - 13 May 2016

where is Minister Zhowau now , he was a hero one month ago threatening to close down non compliant Banks to please who, he wanted to be a hero to who?? What an idiot and this is a man who sais he has education !!! Who in the right frame of mind will bank any cash with this idiotic chaos which has been created by Government, are we still blaming the Sanctions for this. How can we still allow to run this country by ministers which think Zimbabwe is their own Pvt Ltd company.?? How can we go out and make announcements without thinking of the consequences??? Sad this situation very sad. And who is going to stop the usual big wigs to go to the bank and get their US cash in exchange for the ''bond notes'' who is going to stop them.???? Very sad times for Zimbabwe very sad

muzi - 13 May 2016

When was the last time a depositer received a meaningful interest from banks? Instead bankers are pilloried with all sorts of charges such that their savings dwindled. There is no value in having an account save that one can have their salary deposited there. Until you reform, people will continue to keep their money out of the banking institutions.

Unethical banking - 14 May 2016

The banks are not giving incentives to depositors. By the time you withdraw whatever amount you had deposited with the bank the balance would have reduced significantly as a result of bank charges. In addition to that we not seeing any big projects being carried by the government or the private sector.

Nesongano - 14 May 2016

Mangudya and Jinya take Zimbabweans for fools. The problem is they do not even know how to lie. We are told money is not moving offshore becoz the Nostro Accounts are dry. How did they dry up? We know that money is moving offshore selectively. In another article in this paper we are told the Zimbabwe govt bought 60% shareholding in Telecel Zimbabwe amounting to $40 million to VimpelCom. So in spite of this cash crisis this govt saw it fit to remit/externalise $40m to buy shares instead of importing maize or raw materials? What kind of logic is this? Now u want people who are failing to withdraw their cash on demand to deposit some more cash when they are sleeping in queues to withdraw cash? Is this a reasonable request? Mangudya is also threatening to introduce bonds in 2 months time. So all my savings will be converted into worthless bond notes. These people are taking us back to the 2008 era where they destroyed our savings thru hyperinflation. People of Zimbabwe will not accept to be ruined for the second time. We have absolute no trust in John Mangudya and his principals. You cant beg for trust. Trust is earned and this lot cannot be trusted based on their past deeds. U can impose the bond notes if u want but u will find no takers . Any sane and finacial depositer should withdraw his/her cash b4 it is John bonded.Thank u!

Banker - 14 May 2016

Mangudya and Jinya take Zimbabweans for fools. The problem is they do not even know how to lie. We are told money is not moving offshore becoz the Nostro Accounts are dry. How did they dry up? We know that money is moving offshore selectively. In another article in this paper we are told the Zimbabwe govt bought 60% shareholding in Telecel Zimbabwe amounting to $40 million to VimpelCom. So in spite of this cash crisis this govt saw it fit to remit/externalise $40m to buy shares instead of importing maize or raw materials? What kind of logic is this? Now u want people who are failing to withdraw their cash on demand to deposit some more cash when they are sleeping in queues to withdraw cash? Is this a reasonable request? Mangudya is also threatening to introduce bonds in 2 months time. So all my savings will be converted into worthless bond notes. These people are taking us back to the 2008 era where they destroyed our savings thru hyperinflation. People of Zimbabwe will not accept to be ruined for the second time. We have absolute no trust in John Mangudya and his principals. You cant beg for trust. Trust is earned and this lot cannot be trusted based on their past deeds. U can impose the bond notes if u want but u will find no takers . Any sane and finacial depositer should withdraw his/her cash b4 it is John bonded.Thank u!

Banker - 14 May 2016

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.