ECONOMIC analysts have hailed the move by local banks to pay interest on savings and fixed deposits beginning next month saying this would stimulate investment in the economy.
Through Statutory Instrument 65 of 2020, Finance and Economic Development Minister, Professor Mthuli Ncube, has directing banks to pay interest on savings accounts and fixed deposits. The directive was issued to promote financial intermediation and to stimulate production. However, banks were yet to observe the directive and last week the Reserve Bank of Zimbabwe (RBZ) issued a statement that financial institutions through their representative body, the Bankers Association of Zimbabwe, have agreed to the order.
This means financial institutions will, with effect from July 1, 2021, start paying savings accounts a minimum of five percent per annum on local Zimbabwe $, a minimum of one percent per annum on US$.
On fixed term deposits for local Zimbabw $, the RBZ has said a minimum interest rate of 10 percent per annum shall be paid and a minimum of 2,5 percent per annum for US$ and there will be no bank charges on savings accounts and fixed term deposits.
Political Actors Dialogue (POLAD) economic committee chairman Mr Trust Chikohora, who is also the Zimbabwe National Chamber of Commerce former president, said the RBZ directive was long overdue.
“It is very welcome and long overdue because banks should have access to that money and they will be on-lending it, and yet the people who would have put in those funds into the banks were not earning any interest from it,” he said.
“That was grossly unfair and it was not encouraging people to deposit their money into the banks on a more long-term basis. So, this is very welcome and it will also encourage people to deposit their monies in banks on long-term basis, which will be useful for harnessing foreign currency in the formal banking market.”