RBZ scraps bank charges for low-cost accounts

IN a move meant to encourage a culture of banking, the Reserve Bank of Zimbabwe (RBZ) has announced the scrapping of bank charges for low-cost accounts.

Presenting his first Monetary Policy Statement on Friday the RBZ Governor, Dr John Mashayavanhu said the decision was a response to the long standing issue of maintenance fees which were burdening depositors with negative balances, leading to a discouragement of savings.

Dr Mashayavanhu's latest directive not only aims to alleviate the financial strain on depositors but also seeks to reinvigorate confidence in the banking sector by fostering a more inclusive and sustainable financial environment.

He said the RBZ shall continue to monitor the pricing of banking products and services, as well as enforce the pricing framework agreed upon with the Bankers Association of Zimbabwe (BAZ).

"Cognisant of calls by the banking public for affordable and reasonable bank charges, the bank is with immediate effect directing all banking institutions to put exemption clauses on monthly maintenance or service charges for both FCA and ZiG deposit accounts that maintain a consecutive minimum daily balance of US$100 and below or its equivalent in ZiG for a period of up to 30 days.

"This will avoid incidences of low-cost accounts being charged maintenance fees to the point where accounts reach negative balances and, in the process, prejudice depositors and discourage potential savings," said the RBZ Governor.

Dr Mashayavanhu said they envisaged that as banking institutions embark on accelerated digital transformation, the institutions will achieve operational efficiencies which will impact positively on the cost of some banking services.

He said all banking and microfinance institutions were required to establish, implement, and maintain effective and transparent procedures for the reasonable and prompt handling of customer complaints.

The procedures should facilitate complaint resolution promptly in line with the principles of the Consumer Protection Framework.

"The adoption of sustainability principles is increasingly becoming a key pillar to the sustainable growth of economies. Against this background, the Bank continues to work constructively with banking institutions to ensure that the transition to a more sustainable, environmentally, and socially responsible financial sector becomes a reality.

"With effect from the quarter ending 31 March 2024, Boards of banking institutions are required to ensure that sustainability considerations are integrated into the institution's overall business strategy and are part of the agenda for board meetings.

In addition, the board should integrate sustainability into the board governance system," said the RBZ Governor.

Turning to the use of local currency the Governor said while Statutory Instrument 218 of 2023 restored the use of multicurrency in the settlement of any transactions until 31 December 2030, they will prepare a structured roadmap to gradually promote the increased use of the new local currency ZiG towards 2030 deadline.

"To foster demand for the local currency, Government will make it mandatory for companies to settle at least 50 percent of their tax obligations on Quarterly Payments Dates (QPDs) in ZiG.

The bank will continue with its strict liquidity management to mitigate against shocks that cause spikes in the exchange rate.

"Overall, the increased role of the local currency will support and sustain the current macro-economic stability and economic resilience despite the recurrence of global and domestic shocks. The Bank working in collaboration with Government will continue to provide forward guidance to the market in promoting the wide use of ZiG," he said.

Dr Mashayavanhu said the stability of financial institutions is critical given the increased lending in foreign currency in the economy to avoid yesteryear bank non-performing loans challenges.