After
all is said still no movement will be seen, we are in a state where reaction is
the best way to circumvent a situation even though it will be late whereas
proactive is a word just for the dictionary. The local banking sector for
Zimbabwe has been short of stability since 2004 and ten years later we still in
the same state. Already in 2013 Trust Bank was closed down by the central bank
due to reasons such as low capital, insider loans, and high ratio of undeforming
loans among other issues. This is the second time we have heard of this from
the same bank and just to wonder that the central bank did not see this coming
for the second time shows that our regulatory and supervisory unit is not up to
the task in monitoring the sector. Four other banks are still in murky waters
with their capital levels at lowest levels, way below the capital requirements
which were meant to be met by December 2012 and a far cry to the requirements of
$100 million.
Our
economy has made some of the functions of the central bank non-existent because
we are using other nation’s currency and thus we will not be able to control
the issuance of the currency and to a certain extent the money supply. Our central
bank is not even capitalised to be the government’s bank and let alone be the
lender of last resort to the local banks in times of financial crisis, it is
far from capitalised. This in itself incapacitates the governing body to fully
enact all of its duties and that in turn spells darkness to our economy. If the
central bank was fully capitalised we would be having a situation like the one
in America and other countries were banks are given stimulus packages to lift
them from insolvency and thus not affecting the economy and the banking sector.
With this in action survival and long life of our own indigenous banks will be
guaranteed to a certain degree.
Our
banking sector needs regulatory overhaul and improvement as it does not cover a
huge part of the operations of banks. We have seen closure of banks and
re-opening of these banks without any due diligence done on whether they have
the capacity to fully operate without any problems. Licences are just being
issued and the same directors are being retained, the ones that were accused of
insider loans and abusing depositor funds are being recycled and they keep
repeating their same acts with no severe punishments are being charged against
them. The banking sector is a delicate part of the economy and stringent
regulation has to be put in place to maintain stability and confidence within
the sector. We now need action so that we protect the depositors who are always
at risk of losing funds due to lack of inadequate supervision and regulatory. The
banking sector now needs a strict banking act which has penalties for errant
directors, clear supervision methods and transparency within the banks among
other matters which will bring about soundness and stability.
As
much as we might anticipate a miracle from the monetary policy no joy will come
from it otherwise we will only get rhetoric which has been the order of the day
in our country.
