Industrialists warn Zimbabwe banks

LOCAL financial institutions came under the spotlight on Friday as the central bank and industrialists regrouped to review a series of issues they agreed on in October, when relations between the two parties tumbled in the wake of a controversial crackdown on alleged exchange rate offenders.

The Reserve Bank of Zimbabwe (RBZ) said the two parties warned banks to avoid fuelling a deteriorating meltdown and price fragilities by acting as catalysts to transgressions blamed for hurting the economy late last year.

Several chief executive officers were caged and later released during a crackdown against trade on the foreign currency black market.

But industrialists argued that they were only acting to defend shareholder interests.

Banks were also caught up in the fallout, where they were slammed for abating the currency battering by failing to make thorough due diligence on applications for foreign currency at the auction system.

"Banks are encouraged not to be complicit with their delinquent customers," RBZ governor John Mangudya said in a statement yesterday.

"Business must ensure compliance with the provisions of Statutory Instrument 127 of 2021, now embedded in the Finance Act …, with emphasis on avoiding abuse of auction rules and funds from auction allotments; exchange rate manipulation or currency attacks; and non-compliance with the Bank Use Promotion Act," the statement said, noting that the Financial Intelligence Unit would continue its crackdown on forex manipulators and abusers.

"The relevant regulatory authorities were encouraged to carry out enhanced due diligence on auction participants and to monitor the use of funds obtained through the auction and come down strongly on those who submit fake documents (including invoices and bills of entry) and resort to suspension for periods not less than 6 months and blacklisting."

The parties agreed on many more measures to stabilise the exchange rate and limit its effect on inflation.

The central bank was tasked to come up with strategies to enhance the attractiveness of the local currency and strengthen its demand in the context of the multicurrency system currently in place.

It was also mandated to continue to refine the foreign exchange auction system and to timely fund auction allotments in line with the auction rules while continuing to fight inflation through restrictive monetary policies and building foreign exchange reserves as a way of augmenting the defence of the value of the local currency.