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For the past seven years, the government and depositors have been criticising banks for levying usurious charges on transactions and interest rates on loans.  

Bank deposits are not earning any interest as well. In the end, it was, and still is an expense for anyone keeping their money at a bank, or moving it through the local banking system.

In their many addresses, Finance Minister, Patrick Chinamasa and Reserve Bank of Zimbabwe Governor John Mangudya have called on banks to reduce the charges to promote greater financial inclusion and a saving culture.

President Mugabe has been vocal about it as well. Speaking at the burial of national hero Aguy Georgias at the National Heroes’ Acre in December last year he said: “Banks seem to pass their own sanctions package against us, including those who deposit with them. It’s only in banks where time reduces deposited savings, instead of growing them.  One gets punished for depositing savings with banks, it seems. One gets less from one’s deposits, but pays more for borrowing.”

He renewed his criticism last week. He spoke of a complaint he received recently in which a company that had deposited $350,000 in a bank was levied $200 for that transaction.

“If $350,000 has come into the account of a person and into your bank,” he said, “you should give him interest because it increases your capacity to lend also. I think the banking system deserves to be looked into. We should look into it almost immediately.”

Despite the high profile criticism, banks would not move. It took the active involvement of the Reserve Bank of Zimbabwe to get them to reduce interest rates in August last year from as high as 35 percent to between six and 18 percent per annum for productive sectors, mortgages and consumptive borrowing.

It, once again, took the central bank’s active involvement to get banks to reduce their charges this week, a positive development geared to promote use of plastic money amid the obtaining cash crisis.

Depositors were trapped between a rock and a hard place in recent weeks as authorities were encouraging them to swipe so as to reduce the impact of the shortage of US dollar notes yet the cost of doing so was punitive.

We look forward to an improvement after the central bank, after consulting the Bankers’ Association of Zimbabwe and payment systems providers, issued a statement on Tuesday cutting charges on all electronic transactions.

The maximum real time gross settlement (RTGS) charge has been set at $5 from $10 while ATM charges did not change at $2.50. Electronic funds transfer will now attract a minimum fee of 33 cents and a maximum of $2,10, while a point of sale (POS) transaction of up to $10 is now attracting a charge of 10 cents, and transactions above US$10 will be charged 45 cents from $2,50.

POS user charges have been removed, merchant service commission will now range from zero to a maximum of 1 percent for local transactions, while monthly administration charges will range from zero to a maximum of $5 for individuals.

The cuts came a few days after Minister Chinamasa told the Zanu-PF National Consultative Assembly in Harare that the central bank had launched an operation targeted at assessing banking trends by high cash generators — wholesalers, retailers, mobile phone companies and fuel dealers — whose cash deposits dropped by an average 40 percent last month.

The Reserve Bank of Zimbabwe is empowered to take such action by Section 11 of the Bank Use Promotion Act. In terms of that law traders should deposit money into their banks no later than the close of normal business hours on the day following that on which the cash is received or on the next banking day.

Taken together the banking public expects the reduction in bank charges and the operation against cash generators to encourage them to swipe and also immediately help ease the liquidity challenges. The former will not only promote a cashless economy, but also get more people and businesses to bank.  With the new payment and banking regime in place it is not much of an expense now to deposit money in a bank. Thus, there is no need therefore for any individual or corporate entity to keep money under their pillows or in vaults in their offices, risking robberies.

Bond notes to be put into circulation in October should consolidate the impact of the foregoing.

However, we will not forget to urge banks to start paying meaningful interest on savings. We implore our people and foreigners who are sneaking in to mobilise the US dollar and smuggling it out, to obey the law by shunning such behaviour. But only appealing to the conscience of people does not always work without an enforcement mechanism.  Police and Zimra have to be in the picture too to identity and arrest those who continue externalising money.

Measures to stimulate economic recovery and growth need to be intensified so that Zimbabwe produces more to be able to generate more revenue, which will help ease the cash crisis, among other benefits.

A new culture in which individuals use formal banking channels and embrace plastic money is important. Banks should promote that culture.

Businesses have to bank the cash they generate while the government continues to be alert to changing market conditions for necessary corrective policy measures from time to time.