Reserve Bank of Zimbawe governor Gideon Gono has imposed a $10 000 limit on cash withdrawals to curb externalisation of cash.

In his monetary policy statement on Tuesday Gono said high value cash withdrawals had also worsened the liquidity crunch weighing down on the country's economy.



"The money market is currently inundated with challenges resulting from the worsening liquidity, delayed cash payments and illegal externalisation of cash," he said.



"In order to facilitate countrywide smooth payment transactions as well as curbing illegal externalisation of cash, all financial institutions are being called upon to moderate instant cash withdrawals to a maximum of $10 000."



The central bank governor chief urged the transacting public to make use of alternative payments to ease pressure on banks.



A total of 259 000 transactions valued at $65 million were cleared last year compared to 174 000 transactions valued at $42 million in 2010.



Transactions processed through automated teller machines (ATMs) amounted to $905 million during the year under review from $312 million in 2010.



ATM transactions constituted 56 per cent of the total retail transactions in terms of value, indicating a high propensity to cash usage by the ordinary people.



Gono also warned four unnamed banks faced closure if they fail recapitalise within the next two weeks.

He said the non-compliant banks would lose their operating licences as they were deemed to be unsustainable.



Commercial banks were given a minimum requirement of $12, 5 million while merchant banks and building societies were required to have at least $10 and $5 million capital respectively.

Zimbabwe's banking sector is still battling to recover from 2002 financial crisis that saw a number of financial institutions closing down because of an economic crisis.