The financial sector has been one industry that’s performing quite well in recent memory in Zimbabwe. This partly owed to the stringent lending practices which have dramatically reduced non-performing loans and the bank’s disproportionate investments in treasury bills and mortgages.
But there is one component which has propelled it to profits that you won’t notice if you don’t sit down to take a look at their balance sheets. That is, bank charges or bank fees. These are fees which you get charged for account set-up and maintenance, and minor transactional services etc. These include fees such as account balance inquiry, charges for re-activating a bank account, charge for transferring money from one account into another account in the same bank etc. Even though the charges are clearly stated up front, that doesn’t mean its fair to get charged. Some seem so petty (balance inquiry charge), you can’t help but wonder if the bank is using them just to make some extra cash. But it’s from these kinds of fees, that Zimbabwean banks are making tremendous profits.
What Zambia did
These charges are not found in Zimbabwe only, even Zambians were being charged these too before Zambia’s central bank took it upon itself to make sure that customers no longer get ripped off. The central bank of Zambia met with all the financial institutions and it asked them to justify 26 bank charges, to which the banks failed to convince it. Then the central bank just woke one day instructing all banks not to charge 26 certain types of bank fees. How’s that for a central bank that’s promoting financial inclusion? That’s something worth copying for Zimbabwe’s Reserve Bank of Zimbabwe (RBZ), isn’t it? Download the document by Zambia’s central bank here.
The bank charges don’t make sense: A case for Zimbabwe
If anything, (Zimbabwean) banks should pay us (earning interest on our savings) rather than pay them (through the fees they charge us). Logically, the role of the bank is to provide a safe place to keep our money, and sometimes the opportunity to earn interest on our deposits. Yet, we are not earning interest for keeping our monies in their vaults, instead, they charge us these feeble charges.
What the RBZ doesn’t know is that it’s handicapping our banks by leaving them to rely on non-interest income (money generated from these bank fees) instead of earning interest income (revenue that’s generated from lending) by lending to productive sectors. Actually, Zimbabwean banks seem like they are losing their risk appetite, partly because their revenues are buoyed by non-interest income.
Take a look at where the bulk of their lending and investment is going; treasury bills and building houses (for mortgaging). No wonder the bank lending trajectory has been on a downward trend at a time when companies are desperately in need of working capital. Instruct the banks to remove needless fees (many of them), that way they may open more avenues to earn revenue or increase their lending instead of living off our hard earned money by charging us unwarranted bank fees.
Share
Home
4 comments
I see you made a full article on my complaint onon bank charges … And keeping the 2%….excellent …. Its high time we took a look at the ludicrous bank charges …. If they come down gvt 2% will be more palatable and they can increase their revenue even ue base ….this gvt loves priceprice controls
What would you expect of a mugabeist cartel RBZ. For heaven’s sake can the authorities be PATRIOTIC for ONCE,at least! The dire straits in which our economy is in- and will languish in for generations more- cries out for meritocratic appointments at all levels of our economic strata.
Yes, they are ripping us off, especially on that they so called monthly operational charge,some banks are charging $5 every month regardless the A/c is funded or not. If you deposit $50 today, at the end of the year (12 months) your bank Account will have a negative balance of $10 after not withdrawing anything.
it doesn’t make sense to put your money in a bank where you cant access it yet you being charged a monthly fee for money you cant get, that is one other major contributor to a cash crisis because people tend to hoard cash because of that. I will site one example, there is a burial club I know, at one point they had $10 000 in US dollars cash money which could be in circulation by they kept it in a safe because they said once put it in a bank you cant get it, you cant swipe things like cabbages and tomatoes they said and you will be told there is no money in the bank so why should we take it there.Once people get money they hoard it because its now safer and cheaper that way, the banks are not promoting depositing and in fact had the gvt not stepped in and forced companies to deposit money, they wouldn’t be doing it too.