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Minister Patrick Chinamasa

Charity Ruzvidzo Business Reporter
THE demise of Interfin and Allied banks a few days in the New Year heightens the need for urgent reforms in the banking sector to restore depositors’ confidence, analysts have said.The two undercapitalised institutions have been limping for the better part of last year forcing the Reserve Bank of Zimbabwe (RBZ) to seek their liquidation in order to protect depositors and investors.

AfrAsia Bank, Tetrad, and Metbank are yet to recover from the same fever while Econet subsidiary Steward Bank is also shaking over poor performance that has resulted in resignation of its chief executive officer Kwanele Ngwenya last week.

“Banks are failing to attract more depositors due to high levels of unemployment. Companies are shutting down and most people are no longer banking money. Few depositors mean banks don’t have enough liquidity to continue operating,” said Ephraim Makara, a company executive based in Bulawayo.

He said the situation was compounded by high interest rates that have been blamed for the increase of non-performing loans.

“The greatest worry is that our banks want to suck every penny from depositors. Interest rates and transaction charges are too high.
“Instead of creating confidence in depositors they push them way through their exorbitant charges. High rates also scare away investors,” said Makara.

He said banks should have depositors’ interests at heart if they are to survive and noted that a lot of money was circulating outside banks because of fear of high rates.

Another economic analyst, Davison Gomo, said banks were weighed down by the prevailing economic challenges.

“Banks are competing in a stiff market, which has no liquidity. The shutting down of some banks is inevitable,” he said.

However, Lupane State University’s chairman of the Accounting and Finance Department, Julius Tapera, had a different view altogether.

“If a bank isn’t performing well for a long period of time the best solution is to close it,” he said.

He said by voluntarily surrendering its licence, Allied Bank saved potential depositors and investors from losses.

“The banking sector is a very sensitive field, a non performing bank puts depositors at risk and closing such a bank is commendable,” he  said.

In his 2015 national budget policy statement Finance and Economic Development Minister Patrick Chinamasa said a number of reforms were being instituted to strengthen the banking sector.

“These reforms have been necessitated by the need to strengthen the regulatory and supervisory framework as well as enhance financial stability,” he said.