The Reserve Bank of Zimbabwe Governor, Dr Gideon Gono says there is no going back on the US$100 million minimum capital requirements for the financial institutions until there is reduction in interest rates by 50%.
The comments by the central bank Governor come barely a week after the imposition of US$100 million as minimum capital requirements for commercial banks.
The requirements have been received with mixed feelings.
However, the Bankers Association of Zimbabwe has distanced themselves from a letter of appeal to the central bank boss.
Briefing bankers and journalists in the capital, Dr Gono said there is no going back on the minimum capital requirements set, arguing that financial institutions are abusing depositors’ funds to raise capital while they are not willing to reduce interest rates and bank charges.
“There is need for financial institutions to review interest rates downwards before we come up with a statutory instrument to regulate bank charges and interest rates. Please revise interest rates downwards, people still have a zimdollar mentality.
“At one point we had agreed on US$250 million as minimum capital requirements before we finally settled at US$150 million together with bankers at the winter school and I made my adjustments to US$100 million. That will not be reversed until banks slash interest rates by 50%,” said Dr Gono.
In response, Bankers Association of Zimbabwe President, Mr George Guvamatanga said on interest rates, the association is equally guilty as investigations revealed that some institutions are charging interest rates of over 50%, hence the need to find a common ground for the good of the sector.
“Its correct that some financial institutions charge 58% in interest rates and as an association, we are dealing with the matter such that we align interest rates while some institutions are charging between US$10 and US$15 in bank charges,” Mr Guvamatanga said.
The central bank increased minimum capital requirements from US$12.5 million to US$100 million for commercial banks and merchant banks, while building societies are required to have US$80 million, with finance houses and discount houses required to raise US$60 million.
Microfinance institutions are required to have US$5 million.
The measures adopted by the central bank are meant to strengthen the financial services sector since most banks in the region have capital requirements of over US$200 million.