|RBZ unhappy with nostro accounts interest|
|Friday, 01 June 2012 00:00|
huge cash balances repatriated from nostro accounts, this has not reflected in an increase in loans and advances, central bank governor Dr Gideon Gono said in a report to the Finance Ministry.
In February, Dr Gono and Finance Minister Tendai Biti said, with effect from March, banks would be required to maintain 25 percent of their nostro account balances offshore to meet their day-to-day foreign payments obligations while repatriating the balances.
Total bank deposits as at May 25 stood at about US$4 billion.
“These huge balances being held locally by banks may be as a result of failure by the market to take up loans due to, among other factors, prohibiting interest rates ranging from 10-36 percent per annum and strict lending requirements by banks,” said Dr Gono.
In his state of the economy update for the three months to March, Minister Biti told journalists that Government would put in place measures to address distortions of “crazy lending and non-existent deposit rates”.
Industry has been struggling to secure funding from banks due to liquidity shortages and the high cost of funding. Capacity utilisation has remained below 60 percent as foreign financiers take a cautious approach to invest in the country.