Zimbabwe banks to undergo credit rating

Government will convert to law guidelines for the annual credit ratings of banks that were drafted in 2004.

According to the Banking Amendment Bill which was gazetted recently, at least once a year every banking institution shall have its financial state assessed or rated by a credit assessment institution accredited by the Reserve Bank of Zimbabwe.

Analysts say the availability of a rating allows depositors, and other creditors, to assess the relative riskiness of individual banks and to make informed investment decisions.

A credit rating requirement is also likely to enhance incentives for banks to operate their business prudently in order to avoid a rating downgrade.

Under the proposed law, the RBZ is expected to publish guidelines for the accreditation of credit assessment institutions.