Cash crisis erode public confidence in the banking sector

THE crippling cash crisis has potential of eroding public confidence in the banking system, MMC Capital has said.

In the past two months clients have been restricted to withdrawing $200 daily.

MMC Capital said  the crisis will militate against deposits mobilisation with total banking sector deposits projected to grow by 0,96% this year to $5,25 billion.

Last year total banking sector deposits were $5,2 billion.

In its report, Zimbabwe Banking Sector Analysis FY 2015, MMC Capital said the growth of deposits would be constrained by the cash shortages that would militate "against greater public confidence in the banking system".

MMC said due to the cash crisis monetary authorities should encourage the use of plastic money.

"Given the growing informal sector, at the expense of the formal sector, banks should continue to develop products that help in tapping into the unbanked segment of the society if earnings are to be sustained," it said.

It said waning disposable income would further erode the propensity to save and thus impacting negatively on deposit growth.

The MMC warned that the liquidity constraints were likely to continue to be a challenge in Zimbabwe and welcomed the central bank's efforts to plug leakages.