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Zim banks 'worsen cash crisis'
22/01/2008 08:33 - (SA)
Harare - Zimbabwe's central bank chief has accused local banks of creating "artificial" cash shortages by failing to collect money from the country's main bank and distribute it to clients.
Gideon Gono, central bank governor, said: "Nothwithstanding the high levels of cash stocks sitting at the Reserve Bank ready for dispatch into the market, some banking institutions have been noted to be engaging in imprudent and unethical practices, which are creating artificial queues for cash.
"Indepth analysis of banks' asset-liability profiles has shown the following glaring malpractices by some banks, non-collection to pay cash for such cash on collection.
"This inability at some banks is primarily a result of such banks tying depositors' funds in illiquid speculative investments in the stock exchange, real estate, motor vehicles, foreign exchange and other forms of non-core investments."
Blaming govt 'unacceptable'
Last month, Gono threatened to expose high-ranking politicians and top business executives who he said were hoarding cash to buy scarce foreign currency on the burgeoning parallel market.
Gono, a close ally of veteran President Robert Mugabe, announced in December that 200 000-dollar bills (about $8) would cease to be valid at the end of the year as part of efforts to fight the black market.
He later shelved the idea and introduced new 250 000, 500 000 and 750 000 Zim dollar notes as part of measures to ease the cash shortages.
He said the central bank would "not sit by and watch whilst banks use the fictional cash shortages as smokescreens shielding their unethical practices.
"Blaming the government, the reserve bank or the governor all the time is unacceptable and will be met with serious consequences".
Although Gono introduced the new currency denominations, queues were still a common sight at banks across the country with depositors sometimes waiting in vain to withdraw their savings.
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