CBZ Bank to clear RTGS payments

CBZ Bank has stepped up efforts to clear all its outstanding payments through the Real Time Gross Settlement system by the end of this week. The bank indicated that it had put in place measures to maintain the bank's normal turnaround period on such payments.

CBZ Bank said in a statement yesterday: "The bank . . . advises its valued customers and the banking public in general, that measures have been put in place to maintain the bank's normal turnaround times in processing customer payments."

The bank applauded Government's decision to stagger civil service payments to allow a smooth settlement process.
RTGS transactions are supposed to go through in real time, that is as soon as they are made.
CBZ Bank had about US$18 million in RTGS balances after a slowdown in the processing transactions towards the end of last year.
The country's biggest bank is one of the banks affected by the liquidity constraints caused by high value and high volume transactions associated with the end and beginning of the new year.

Being the biggest in the country, CBZ Bank handled in excess of US$400 million in payments for Government projects, salaries, pensions and bonuses for civil servants in December alone.
The frequent high value transactions drained liquidity from the entire banking sector making it impossible for customers to access cash even after banks debited their accounts, which would also reflect positive balances.

The fact that CBZ Bank accounts for about 70 percent of the RTGS market meant a slowdown in its RTGS processing speeds also affected the majority of indigenous banks that depended on payments from the bank.
Arguably, as bankers for Government, CBZ Bank remains the most liquid domestic financial institution, but the frequency of high value transactions makes it difficult to immediately transfer cash after RTGS transfers.

Government, through the Reserve Bank, has also come up with measures to ease liquidity challenges.
Announcing the 2012 Monetary Policy Statement last week RBZ Governor Dr Gideon Gono set US$10 000 as the maximum instant cash withdrawal limit with all amounts above that threshold requiring prior notice to banks.

Dr Gono also urged financial institutions sitting on excess liquidity to extend overnight accommodation to banks facing shortages.
The market has faced acute liquidity constraints due to the absence of RBZ's lender of last resort function.
The banks have been unwilling to extend cover to each other due to the perceptions of latent risk in the banking sector against the backdrop of lack of financial instruments or security the banks could use to borrow funds.

Further, to improve liquidity in the banking sector and the economy in general, the central bank governor called on banks holding large sums of deposits in foreign accounts to repatriate some of the money back to Zimbabwe.

But liquidity will soon improve amid plans to convert the US$83 million statutory reserve payments owed to banks by the central bank into a discounted and tradable paper that will also serve as security to access funding.

This comes as the central bank will soon receive US$20 million from Treasury for its lender of last resort function to augment the US$7 million Government had earlier earmarked for the same purpose sometime last year.