Zimbabwe banks charging public for changing defaced or old US dollar notes

SOME commercial banks are charging up to $5 to change torn, defaced or old notes with new ones for amounts ranging between $1 and $500, prompting the Reserve Bank of Zimbabwe to warn them against prejudicing and abusing the public.

But the banks are arguing that they are providing a service and are therefore justified to charge a fee.

The central bank yesterday said banks should adhere to standard banking practices when exchanging old, dirty and defaced notes.

It also emerged that for transactions of more than $500, the banks were charging between one percent and 1,5 percent of the amount being redeemed for new notes.

The RBZ said banks should ensure the public received due value in exchange of their soiled notes.

This follows revelations that some commercial banks were charging outrageous amounts to change torn and defaced bills with clean bills, which did not reflect value for money.

RBZ spokesperson Mr Kumbirai Nhongo yesterday said although Zimbabwe did not have legislation that governed soiled notes under the multi-currency system, banks should not prejudice the public.

"Zimbabwe does not have legislation that governs soiled notes under the prevailing multi-currency system.

"The local banking sector has therefore taken the initiative to ensure the repatriation and exchange of soiled notes for new ones, through their international bank note suppliers. However, such innovation does not give banks the leeway to abuse and prejudice the public of their hard earned foreign currency," Mr Nhongo said.

He urged the banking sector to uphold banking ethics and practices and warned that those who failed to do so would be dealt with accordingly.

"As such, we call upon the banking sector to adhere to the pillars of sound banking practice and ensure that the citizens of Zimbabwe receive due value in exchange of their soiled notes; failure which the central bank would be compelled to intervene through appropriate corrective measures," he said.

Last month, banks claimed that they were ready to issue out new US dollar bills to replace old, dirty and defaced notes in circulation if the public and businesses deposit the money.

The Bankers Association of Zimbabwe recently said no payment would be demanded in exchange for the new notes.

BAZ president Mr John Mushayavanhu said this would make it easier for banks to facilitate repatriation of old notes to the Federal Reserve Bank of the United States and receive new bills.

He said people could simply walk into any bank and exchange their old bills.

Old notes in circulation continue to cause disputes as some do not want to accept them.

Some shops, commuter omnibus crews and cellphone recharge card vendors were refusing to accept old and torn notes largely in $1, $2 and $5 denominations.

Most of these notes are badly soiled, defaced, disintegrated, worn out and torn because they change hands frequently.

Some of the notes are defaced through unintentional means such as fire, water and chemical damage.

However, some bankers yesterday said they were in business and would not offer services for free.

"There is no way we can allow people to just walk in with their money and get new notes without paying anything. We can do that for our clients, not for everyone," said a banker who refused to be named.

The US government will replace worn out or damaged money if three-fifths of it is still identifiable.

Two-fifths will earn the bearer half the face value; less than that gets nothing. Every year, the US Treasury handles over 30 000 claims of destroyed or badly damaged currency.

The Herald carried out some investigations in city banks and found out that banks were charging people for changing old notes contrary to Mr Mushayavanhu's assertion.

Some building societies said they did not offer such facilities while commercial banks said the service was there for a fee.