Stick to banking principles Zim’s banks told
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Cas Coovadia

South Africa’s Banking Association managing director Mr Cas Coovadia says Zimbabwe’s banks should stick to banking principles and build depositor confidence in order to avoid more closures.A total of nine banks have closed since 2011 mostly due to high levels of Non-Performing Loans (NPLs) and poor corporate governance.

In an interview, Mr Coovadia said Zimbabwe’s financial services sector needs to re-build lost confidence and desist from malpractices.

“The banks should stick to banking principles and avoid poor corporate governance which has resulted in many banks failing along the way in recent years,” he said.

He said the high non-performing ratio in failed banks made it difficult for them to meet their obligations and resulted in them going burst.

“According to basic banking principles, loans require sufficient monitoring through a cautious approach while at the same time having an efficient credit rating and recovery systems,” he said.

Mr Coovadia said the central bank should also play a leading role when dealing with the crisis through proper surveillance measures on banks.

“The Apex Bank should monitor the banks in a manner that ensures they do not flaw processes that prejudice depositors. If this mandate is effectively carried out, then some of the malpractices could be detected early and mitigation measures put in place,” he said.

It is believed that since 2009, a total 1 222 jobs have been lost in the banking sector as more banks collapsed and the workers are owed in excess of $3 million in salaries, employee benefits and pensions.

Mr Coovadia said banks should also lead in financing key productive sectors of the economy which in turn increases economic activity.

He said Zimbabwe’s economy has its own shortcomings but has potential to move from current status through diversifying the economy.
Mr Coovadia said the economy is heavily taxed instead of incentivising which is key to economic revival.

“You cannot have an economy that is over taxed and expect it to grow, the Government needs to do something,” he said. — Wires.

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