Thursday, 5 May 2016


BANKS have taken advantage of the prevailing cash shortages by hiking their transaction costs by as much as 570 percent, leaving the bulk of depositors who are already living on the margins of poverty poorer, the Financial Gazette can report.
This has infuriated long-suffering depositors who strongly, and rightly so, feel that cash should be made available at affordable charges, on demand.

 It is now being feared that the punitive bank charges could further diminish confidence in the turbulent financial services sector, which is critical in allocating resources in an economy.

 The situation has even led workers who are gainfully employed in the formal sector to start contemplating receiving their salaries through other electronic platforms such as EcoCash, One Wallet and TeleCash whose charges are much lower.
Zimbabwe is presently grappling with an unprecedented shortage of notes, which has forced banks to limit daily cash withdrawals.

 Considering that a depositor who used to make a single trip to the bank now has to make multiple withdrawals in a week because of the daily cash withdrawal cap, the punitive charges are translating into jaw-dropping margins for the banks, and significantly huge costs for depositors.

 Before the cash crisis, most banks were charging withdrawal fees of about US$3 for withdrawals made in the banking halls and US$2,50 for withdrawals done on Automated Teller Machines (ATMs) for cash of up to US$1 000.
But now, a depositor is now parting with US$20 for a withdrawal of US$1 000 made over several days because of the cash limits, implying a hike of between US$17 and US$17,50 or nearly 570 percent.

 Some banks are charging slightly less, but overall, all have increased their withdrawal charges by huge margins.
Even international payment charges have gone up because of the high costs of settling international card transactions. For instance, the cash withdrawal fee for international debit cards has gone up from three percent to five percent per transaction, with a minimum charge of US$3,50 per transaction for those using Mastercards.

 Bank executives argued this week that the harsh operating environment has increased costs of keeping their units viable, which overheads could only be recouped from the banking public.

 For example, most foreign-owned banks are being forced to import cash with the cost of doing so being passed onto the customers.
Bankers Association of Zimbabwe (BAZ) president, Charity Jinya, yesterday said the workload for the banks has increased, which also follows that the cost of processing transactions has gone up.

 She said this was not of the banks’ making.
“It’s a situation none of us want to be in. It’s a sign of the times. (But) things can’t be done for free. Since we are now repeating transactions, just look at the amount of work bankers are now getting to do. Labour wants to be paid for it,” said Jinya.

 Economist, Brains Muchemwa, said the on-going cash crisis has plunged banks into a tight corner with regards to funding their nostros and cash importation requirements. Inadvertently, the associated costs are being, to some extent, passed on to consumers so as to share the national burden.

 “The resolution entails largely allowing banks higher retention levels on their nostro balances so that they better forecast funding cash requirements,” he said.
A nostro account is a bank account held in a foreign country by a domestic bank, denominated in the currency of that country.

 It is used to facilitate settlement of foreign exchange and trade transactions.
The Consumer Council of Zimbabwe has described the situation confronting depositors as “very distressing”.


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