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Gono sticks to his guns amid Zimbabwe’s bank reform woes

By Janet Shoko
Posted on Monday, 6 August 2012 15:20

Reserve Bank of Zimbabwe governor, Gideon Gono raised the minimum required capital eight fold, but it is feared that this will lead to the collapse of banks, in a country where three banks have gone under in the first seven months of the year.

Already the Secretary to the President and Cabinet has written to Gono, advising him to reverse the decision, but Gono is sticking to his guns, saying his decision is irreversible.

The central bank chief says he took his mid-term monetary policy statement to President Robert Mugabe, who gave it the thumbs up, before he made it public and he does not understand where opposition is coming from.

The Bankers Association of Zimbabwe (BAZ) has also written an impassioned letter to Gono asking him to reconsider, but so far this has drawn a blank.

BAZ vice president, Sam Malaba said the new dispensation would erode confidence in the banking sector and also make it difficult for banks to access credit lines.

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Commercial banks are expected to increase their minimum paid up capital from US$12.5 to US$100 million by June 2014 Minimum capital requirements for building societies were increased from US$10 million to US$80 million.

Finance and discount houses are expected to increase their minimum capital to US$60 from $7.5 million, while micro finance institutions’ requirements were increased from US$1 million to US$5 million.

“Every banking institution whose minimum paid up capital does not comply with the respective prescribed levels will be required to submit a detailed recapitalisation plan by September 2012,” Gono said.

However, critics claim when compared to other banks in the region, Zimbabwe has the highest requirements.

Zambian banks are required to have a minimum capital of US$20 million for local institutions, while foreign ones should have US$100m, Ugandan commercial banks should have US$10.4 million, while Tanzania demands US$9.5million and Kenya requires US$11.4 million.

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