The rise in total deposits from US$2.3 billion in December last year to US$2.8 billion by June this year has retained confidence in the local banking sector.The growth in the financial sector deposits has been attributed to the central bankâ€™s restoration of sound corporate governance systems that has resulted in banks increasing lending to industry and individuals.
According to the central bank, total deposits held by banks grew by US$572 million to US$2.899 billion in June this year from US$2.3 billion in December last year.
A financial analyst, Mr. Nick Moyo says the rise in the volume of deposits is a reflection that in spite of the cash flow challenges affecting the economy, the banking industry is safe for short to long term investments.
â€œIt basically means that we are on the right path for our banks,â€ said Mr. Moyo.
In terms of US$2, 6 billion in loans distributed by the banks in the first six months of this year, the distribution sector received the lionâ€™s share of credit of around 40%.
The agriculture sector accounted for 21, 2%, manufacturing 19, 8%, transport and communication 4, 6%, construction 2, 1% and others 6, 6%.
An economist, Mr. Brains Muchemwa says the growth in deposits should translate into increased lending at affordable rates.
â€œWe hope this will help in boosting lending to consumers and industry,â€ Mr. Muchemwa said.
Local companies are facing challenges in accessing external financing on the backdrop of high interest rates.
However, monetary authorities are calling upon banks to play an important role in sustaining economic requirements through the provision of long term loans at concessionary rates.