banking sector.jpgUndercapitalised financial institutions are grappling to meet the minimum capital requirements ahead of Tuesday’s deadline amid calls for leniency as closing banks will send the wrong signal to potential investors.

Under the monetary policy statement announced by the Central Bank Governor, Dr Gideon Gono last month, undercapitalised financial institutions had been given two weeks to meet the minimum capital requirements with the deadline expiring this Tuesday.

It is believed that though there has been less activity in the market on acquisitions and takeovers, indigenous banks are the most affected.

Economist, Mr. Innocent Makwiramiti said despite the need to ensure that financial institutions comply with measures from monetary authorities, the deadline needs to be extended to the end of the month as the economy has been affected by liquidity challenges.

Zimbabwe National Chamber of Commerce economist, Mr. Kipson Gundani said indigenous financial institutions have struggled during the Zimbabwean dollar era and have been supporting government initiatives for stability of the economy, hence the need for leniency.

Several financial institutions have been struggling to meet the minimum capital requirements of US$12.5 million and US$10 million for merchant banks.

Despite activity for two financial institutions that have engaged strategic partners to meet the demands, three other banks are still in the red, with economists calling for their downgrading into micro-financial institutions as punishment rather than cancelling their licences.