Depositors are shunning banks owing to depressed interest rates from savings, a move that has resulted in an estimated US$2,5 billion dollars circulating outside the countryâ€™s formal banking system.
According to official economic data released this week by a local financial research firm, high bank charges and low interest rates from savings continue to dampen confidence of the banking public to deposit their money in banks.
The data shows that in spite of a growth in deposits from US$1, 85 billion in June 2010 to US$2, 90 billion as of June this year, banks still have a lot of work to do as it is being estimated that about US$2,5 billion remains untapped from the informal financial sector transactions.
Members of the banking public told ZBC News that poor returns from deposits have resulted in depositors losing confidence in terms of saving funds in their bank accounts for either short term or long term periods.
However, the Bankers Association of Zimbabwe has revealed in a statement that while banks are committed towards ensuring a favourable saving and lending policy to depositors, increased operational costs, rising non performing loans and liquidity constraints are making it difficult for financialÂ institutions toÂ come up with higher returns on savings for depositors.
Economic observers say although the financialÂ sectors is being considered stable by the Reserve BankÂ of Zimbabwe, there is need for relevant authorities to ensure that money, which is circulating outside the formal banking sector, is tapped into the formal financial system for the benefit of key productive sectors.