Zimbabwe has pushed back by six years its June deadline for banks to raise minimum capital to $100 million from $25 million, the central bank said on Wednesday, relieving pressure on undercapitalised local banks.
It also said it would allow more currencies, including the Japanese yen, Chinese yuan, Indian rupee and Australian dollar, to circulate to ease a liquidity crunch. Zimbabwe abandoned its own money in 2009 after hyperinflation rendered it worthless.
The Reserve Bank in 2012 gave banks until June this year to increase capital, but acting central bank governor Charity Dhliwayo said in a monetary policy statement the deadline had been moved to June 2020.
“Without a doubt banks will feel relieved because it is almost impossible for Zimbabwean-owned banks to raise $100 million in this economy,” said a senior bank executive at a local commercial bank, who declined to be named.
Banks and the government had said the new requirements were too steep in an economy already struggling to grow and are higher than those in much larger regional economies such as South Africa, Kenya and Angola.
“The Reserve Bank urges banking institutions to continue their efforts to strengthen their capital positions in order to maintain relevance in the economy,” said Dhliwayo.
Customers have in the last three months struggled to withdraw money from smaller banks and Dhliwayo said these should consider mergers or getting new shareholders as they remained a danger to the stability of the financial sector.
She said some banks had in the past been hit by non-performing loans taken out by insiders, such as bank shareholders or employees. The central bank has now outlawed such loans, of which 67 percent were non performing.
Britain’s Standard Chartered and Barclays Plc and South Africa’s Standard Bank and Nedbank are the major foreign banks with operations in Zimbabwe.
Since 2009, the southern African state has been using foreign currencies such as the U.S. dollar and South Africa’s rand which has left the central bank little scope to influence rates.
On Tuesday it published an interest rate range guide for the money market to try and rein in large disparities in deposit and lending rates it said were squeezing liquidity.