EDITORIAL COMMENT: Implement bank reforms without delay

CASH

Most businesses and individuals are reluctant to bank their money and this is partly because of the high bank charges and loss of confidence in the banking sector. Many depositors have lost thousands of dollars if not millions to banks that have closed as a result of abuse of the depositors’ money.

This development has killed the culture of banking hence many businesses are keeping the money at their premises or homes despite the risk of losing the money to thieves or robbers. The government has since proposed banking sector reforms to ensure depositors get value for their money.

At the moment people who bank their money are losing value of their savings while at the same time they are being charged huge interests for borrowing. The thrust therefore should be to restore confidence in the banking sector so that people can once again keep money in the banks as opposed to taking the risk of keeping the money at business premises or at home.

This reluctance by businesses and individuals to bank their money is partly to blame for the liquidity challenges facing the country. The recent approval of the Banking Amendement Bill by Parliament which seeks to deter bank officials from being reckless with the depositors’ money was therefore long overdue. The Bill which was passed by both the National Assembly and the Senate in December, awaits President Robert Mugabe’s signature for it to become law.

When it becomes law, bankers that fail to repay depositors, are found to be reckless or grossly negligent with  depositors’ money, face up to 10 years in jail. The Reserve Bank of Zimbabwe Governor, John Mangudya, said on Wednesday that bankers have in the past abused depositors’ funds because there was no legal provision penalising them for such mischief.

The new law is set to improve governance in banking and protect depositors from thieves. There are numerous cases of banks that have been forced to close after bank officials abused depositors’ funds.

Directors and chief executives of banks have abused depositors’ funds by advancing themselves and their relatives loans which were never repaid.

In many of the cases, proper assessment of loan applications to ensure depositors’ money was protected was not done.

Those mandated to approve loans deliberately overlooked issues such as collateral and capacity to repay the loan. The recklessness, gross negligence, fraud and other criminal conduct within the bank sector, we believe, will be minimised once the new law comes into effect.

It is our hope that this new law will go a long way in restoring confidence in the banking sector which will see an increased number of businesses and individuals banking their money.

The government should, without delay, implement its proposed strategies to reform the banking sector so that depositors are not punished for depositing their money but should instead be rewarded through being paid interests on their savings. There is therefore need to ensure bank charges are drastically reduced.

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