RBZ urges banks to lower charges

via RBZ urges banks to lower charges – DailyNews Live 16 February 2015

HARARE – The Reserve Bank of Zimbabwe (RBZ) has implored financial institutions to lower bank charges and peg new accounts opening at $5 as a way of promoting financial inclusion in the country.

John Mangudya, the central bank chief said there was need for banks operating in the country to operationalise low costs accounts to cater for the majority of cash-strapped Zimbabweans without bank accounts.

“The Reserve Bank has observed that in a number of jurisdictions such as South Africa, India and Canada, conscientious efforts and collaborative arrangements between monetary authorities and banking institutions have allowed for the operation of low cost accounts to make banking more accessible to the public and, specifically, to increase banking reach to all communities,” he said in his second monetary policy statement.

He noted that in South Africa, for example, the low income transacting account is called Mzansi Account.

Mangudya said he was, however, pleased to note that some local banks were already providing low cost bank accounts to the banking public in Zimbabwe.

“In order to widen such initiatives and promote financial inclusion, the Reserve Bank and the Bankers Association of Zimbabwe (Baz) have resolved that banks, without low cost accounts, should at least provide the banking public with basic banking services at low or no cost,” he said.

This comes as the majority of people in the southern African country do not have bank accounts due to lack of confidence in the financial services sector as well as low disposable incomes.

According to the latest Finscope study, at least $4 billion is estimated to be circulating outside the formal banking sector.

Last week the Zimbabwe Economic Policy Analysis and Research Unit (Zeparu) in a report said the country’s informal sector remains largely unbanked with only about 23,8 percent of players under the economic bracket with bank accounts.

The research firm attributed the low number of players with accounts to a negative attitude and difficulties associated with opening bank accounts in the country.

The survey — carried out by Zeparu and Baz — also noted that the informal sector traders currently generate more income compared to those in the formal sector employment.

“The average revenue for the informal sector players is about $1 413, with the maximum being about $24 000 per month, which is way above salaries for formal sector employees who get bank loans,” said the report.

Although the majority of the respondents do not have business bank accounts, about 44,6 percent of them have personal bank accounts while about 72,3 percent of those with personal bank accounts but without business bank accounts, use them for business purposes.

“The players pointed out the complicated procedures which take most of their time when trying to open bank accounts, including required documentation such as proof of residence, which is difficult to get. Business bank accounts are also difficult to open for unregistered businesses,” reads the report.

In terms of borrowing, the study said about 35,5 percent of the respondents have borrowed from friends, relatives, banks and microfinance institutions within the past four years.

The main source of borrowing was microfinance institutions that accounted for 31,4 percent, while those who borrowed from other sources such as NGOs, government and producer associations constituted about 17,4 percent.