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Aguy Georgias

ZIMBABWE this week lost one of its renowned fighters Senator Aguy Georgias, a national hero, who was well-known for his fight for justice, one of his notable fights was for the enforcement of the in duplum rule that ensures banks do not charge interest rates that exceed the amount borrowed.

The unjust application of interest rates that Senator Georgias fought against is the one that has seen many people losing property worth millions to banks due to unpaid loans.

Auctioneers have hit a purple patch in recent months as they are taking up acres of space in newspapers almost daily to advertise an assortment of goods from equipment, houses, stands, cars to household furniture that they intend to auction belonging to individuals or companies that have failed to repay their loans.

Some of the figures being claimed by the banks are quite frightening yet they were very manageable when the individuals accessed the loans. While reasons for failure to repay the loans are varied, it is unfathomable for banks to take advantage of this failure to charge high interest.

We, therefore, totally agree with President Mugabe that both borrowers and depositors are at the mercy of banks and this calls for reforms on the part of banks sooner rather than later.

We believe that the banks should take the initiative to remedy the situation instead of forcing Government’s hand.

While we do not condone non-repayment of loans we believe that banks should be fair when applying interest to a loan because the failure by some individuals to repay their loans in due to interest rates that grow at a faster rate than the loan itself.

Although the plan to auction people’s property might be a solution it is just, but a short term solution in our view and not sustainable in the long run.

We believe that the 18 percent agreed to by banks and the Reserve Bank of Zimbabwe in October this year, while noble, should be adhered to in the strictest sense if we are to heal the rift between banks and their borrowers.

It’s also ironic that while banks demand so much interest from borrowers, raking in millions in the process, most of that money is going towards beefing up their bottom lines while very little is going towards rewarding the depositors whose money they are using to lend.

It is high time that banks do the honourable thing by giving as much as they are taking.

The Government is making concerted efforts to turnaround the economy by implementing the Zim-Asset economic blueprint and banks should come to the party by ensuring that they play their part.

For instance the country is trying to mobilise resources in the informal sector as well as inculcating a culture of saving in the country, which is critical to the survival of the banks, but the banks are not providing a conducive environment for this by offering acceptable interest on deposits.

Banks should not lose sight of the fact that they exist because of the borrowers and depositors and if they lose both or one of the two they go bust.

Already there are signs that people are moving away from the conventional mode of banking to other forms such as mobile banking.

This should be a wakeup call for the banks that they should not take depositors and borrowers for granted. The old adage that the customer is king should apply here.

In our view there is need to revisit the Memorandum of Understanding that was signed between the banks and the RBZ in 2012 which brought a win-win situation for both depositors and borrowers.

While the MoU was a bitter pill to swallow for the banks because it affected their income, we believe that the spirit and purpose upon which it was crafted was spot on, but the thresholds can be tweaked to ensure a win-win situation for all.