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RBZ extends loan ban to individuals, corporates

by Staff reporter
11 May 2022 at 08:22hrs | Views
THE Reserve Bank of Zimbabwe (RBZ) has extended the suspension of lending of both local and foreign currency units by an array of financial  institutions to also cover corporates and individuals.

The regulations, however, exclude offshore drawdowns, said the monetary authority.

President Mnangagwa, at the weekend, announced a raft of interventions aimed at restoring confidence, preserving value and restoring macro-economic stability.

These include the temporary suspension of loans by banks to both the Government and the private sector while cash withdrawals for amounts above US$1 000 will now attract a two percent levy.

President Mnangagwa said investigations into possible abuse of loan facilities to feed the parallel market are ongoing.

In a latest statement to all financial institutions on Monday, which was seen by Business Chronicle, the apex bank said no new credit facilities should be issued as the temporary suspension covers new loans.

"We bring your attention to paragraph 40 of the Presidential Announcement on the suspension of lending by banking institutions, building societies, development finance institutions, deposit-taking and credit-only microfinance institutions to the Government and private sector," said the RBZ.

"For the avoidance of doubt, this suspension relates to all lending, whether local currency or foreign currency, to Government and the private sector, including corporates, other legal entities and individuals.

"We further confirm that no new credit facilities should be issued as the suspension covers new loans, undrawn portions of agreed facilities, overdrafts and other forms of borrowing instruments, by whatever name they are called."

The apex bank said that with "respect to pipeline transactions, where all the facility terms and conditions have been met before the above pronouncements, institutions may approach the Reserve Bank for considerations, on a case-by-case basis".

However, the suspension of lending does not apply to offshore drawdowns, it clarified.

In his address, President Mnangagwa said the security agents of the Government and the Financial Intelligence Unit shall, with immediate effect, enhance their roles to effectively monitor financial transactions to address the delinquent arbitrage behaviour in the economy.

This was further buttressed by the central bank, which said it will monitor compliance and take appropriate supervisory action against non-compliant institutions

Source - The Chronicle
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