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Golden Sibanda Senior Business Reporter
The non-performing loans ratio has declined to an average of 14 percent from 16,5 percent following the assumption of over $100 million bad debts by a central bank company and the closure of troubled banks. In an interview, Reserve Bank of Zimbabwe governor Dr John Mangudya said that ZAMCO would continue to review the NPLs held by banking institutions with a view to taking them over. “There is never a final position with ZAMCO, it’s a process and its job is continuous on a daily basis, which is getting returns from banks and looking at risk mitigation,” he said.

The central bank unit receives submissions of NPLs from banks for review. Where necessary it assumes the NPLs and pays the banks to relieve them of the bad loans.

ZAMCO is fully constituted with staff, management and board whose sole responsibility is dealing with the scourge of bad loans that have afflicted domestic banks. Dr Mangudya said it was not clear how much of the $800 million NPLs were not secured, which is why ZAMCO would continuously evaluate the securitised loans for takeover.

But the central bank chief said that the prevalence of bad loans, which had seen banks cutting down on lending, had decreased after some troubled banks closed down.

“They (NPLs) have gone down because other banks, which also had non-performing loans have closed down, so the rate is about 14 percent now,” the central bank chief said.

He said the marked decline in non-performing loans had the effect of bringing back confidence into the banking sector since ZAMCO was restructuring NPLs on the books of banks.

The decline in NPLs marks a significant drop from an average of 20 percent last year, prior to the introduction of measures by the central bank to unfreeze loans to productive sectors.

According to Dr Mangudya, NPLs had resulted in banks drastically reducing their loan provision to productive sectors of the economy in an attempt to minimise their exposure.