Banks need to reform | Business Times

Zimbabwe banks should reform and stop fleecing  long suffering depositors as this could erode the banking public trust  in the financial sector.

It’s astonishing that lenders have been prospering because of the new emphasis on non-funded income rather than their primary business of lending more, even though practically every other industry in the country is struggling to survive as a result of a weak economy.

Regretfully, banks have achieved this by imposing astronomically high fees and charges on depositors, who are the most susceptible group.

This week, the majority of banks increased their withdrawal fees from 1% a few months ago to roughly 3% of the amount withdrawn.

A 2.5% fee is also paid by depositors for withdrawals made through automated teller machines.

The steep increase in service charges has angered the long-suffering depositors, who said the charges were an unpleasant pill to swallow.

The government sent a strong warning to the financial institutions out of concern that this would deter people from making bank deposits.

“Banks please, your charges [are exorbitant]. Someone commented that we no longer have banks in this country but we now have real estate companies masquerading as banks. Banks  are collecting rent from customers on a monthly basis,” permanent secretary in the Ministry of Finance, Economic Development and Investment Promotion, George Guvamatanga, said.

He continued: “Banks are the biggest problem as far as the confidence is concerned because they are all focusing on this non funded income instead of the core business that you lend and you get interest. I was looking at the financial results [banks], most of are now at 60%/70% non-funded income. I know  they (banks) have restructured their businesses with a 70% non-funded income that’s not achievable anywhere in the world.

It actually shows that the cost of banking in this country is just too high. It’s something we have not spoken about. I hope banks will relook at it  and make adjustments.”

 

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