income and support the infrastructure they put in place when the economy was
faring better.
Individuals and corporates are forking out between US$25 and US$50 monthly
in bank charges, far above regional averages of below US$30.
But the Bankers Association of Zimbabwe Baz says local bank charges are in
line with regional charges. Figures obtained by businessdigest from local
banks last week show that an individual is charged between US$1 and US$5 for
a single withdrawal while companies pay up to US$9 to be issued with a
draft/RMO.
Telegraphic transfers cost between US$15 and US$30 for both corporates and
individuals depending on the amount involved. The same amount is charged for
deposits received by telegraphic transfer.
Asked if local bank charges were not too high when compared to the region,
Bankers Association of Zimbabwe (Baz) president John Mushayavanhu said local
charges where competitive.
"As Baz, we have done a study of bank charges in the region and overseas and
I can confirm to you that our charges are very comparable to the charges
prevailing in the region," he said.
"What we are focusing on now is continuous investment in electronic banking,
which reduces cost. On interest rates charged by banks, we are working,
through moral suasion within the association, to reduce the disparity on
interest rates being offered and/or charged by banks.
"This will go a long way in minimising the underlying contagion effect of
arbitrage opportunities associated with the disparity," Mushayavanhu said.
Local banks are also charging as much as US$15 for a single deposit.
The average regional charge for the same transaction is US$7.
Some banks are not charging for maintaining clients' accounts, but others
are levying US$3.
Corporates are being charged between US$8 and US$12 per month for monthly
account maintenance. FCA inter account transfers cost between US$1 and US$5
depending on the bank for both individuals and corporates.
Service charges for salary processing tariffs cost between US$1, 50 and US$4
per entry for manual salary payments. Unclaimed salaries cost between US$4
and US$7.
Companies are being charged between US$7 and US$10 per payroll for late
salary submissions.
Most banks have not set a charge for intermediated money transfer tax.
Facility negotiation fees for companies cost 5% of the value of the
overdraft or loan. Between US$4 and US$8 is charged for stop orders.
Economist David Mupamhadzi on Tuesday however told businessdigest that bank
charges in Zimbabwe were punitive, and discouraged people from using formal
channels for savings, a situation that is undesirable especially given the
liquidity problems that the economy is facing.
"Banks should play a leading role in mobilising savings across the whole
country through offering attractive returns, however in the case of Zimbabwe
this is not happening because of the high bank charges and the low returns
on deposits," he said.
"Most banks in the region do not use bank charges as a main source of
income, a situation which is prevalent in Zimbabwe. In South Africa for
example high bank charges are levied on people who withdraw huge amounts of
cash, as a way of discouraging people from withdrawing huge amounts of
cash," Mupamhadzi said.
He said people were encouraged to use internet banking and plastic cards
instead of carrying cash because of the high rates of crime.
"The high bank charges are not justified. There is need for the banks to
restructure their business models in line with the reality on the ground.
There is no way banks can maintain the same infrastructure, and staff, in
this current environment as they had a few years ago," Mupamhadzi added.
He said instead of doing "cosmetic adjustments, there is need for banks to
take tough decisions on issues like infrastructure, number of employees and
benefits, in light of the volume of business".
"There is need for banks in Zimbabwe to diversify their sources of income,
than relying on the bank charges to carry their high operating costs," he
said.
He said the proposed use of e-banking was a step in the right direction, and
is in line with developments in the region and beyond.
Accounts closed within six months are attracting a fee of between US$18 and
US$25, while reactivation of a dormant account costs between US$20 and
US$25. Services for bonds guarantees, securities and indemnities and bills
range between 5% and 10% of the amount at hand.
Charges for letters of guarantee, and guarantees are between 4% and 6% of
the amount involved. Letters of credit for foreign inward cost US$75 per
credit. Foreign outward for commercial banks cost 10% of the amount being
transacted.
Farayi Dyirakumunda, an executive director of African Investment Markets
said, "Banks typically derive their income from a combination of interest
income as well as non funded income which includes bank charges."
"The charges are somewhat justified given the cost structures prevailing in
the banking institutions," he said
"Given the subdued income from the core lending activities, fees and
commission income have been maximised to boost overall profitability but
this will gradually correct itself in response to market forces and
technological advances. Fees and service charges will however remain an
integral part of all banking institutions' income," said Dyirakumunda.
Bankers interviewed last week said banks were currently making money from
loan portfolios but given the uncertainty in the deposits levels, they were
becoming prudent by writing smaller percentages of loans so as to manage the
liquidity risk.
Paul Nyakazeya
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