We still allow ‘free fund’ FCA withdrawals – FBC chief

FBC Bank managing director Webster Rusere

FBC Bank managing director Webster Rusere says the bank still allows forex cash withdrawals for depositors holding ‘free funds’, allaying fears raised by a leaked internal circular which appeared to change rules on the operation of foreign currency accounts (FCAs).

The October 4 memo, which was widely interpreted as a reversal of the Reserve Bank of Zimbabwe’s stated policy and repeated assurances on FCAs, spooked depositors and triggered alarm that the accounts were going to be ‘raided.’

Rusere told a parliamentary committee on Monday that the memo only sought to communicate how the bank would treat FCAs operated by employees of local firms and organisations, who enjoy a special dispensation from the RBZ to receive foreign currency-denominated salaries.

“This circular that found itself on social media was an internal circular for a bank and it was commenting on approval for certain requests made by some companies, and it only referred to foreign currencies funded by export proceeds and does not relate to free funds,” Rusere, speaking as the Bankers’ Association of Zimbabwe president, said.

“This was an internal circular meant to guide on some conditions of approval, but unfortunately people chose to read one line which talked of disposal of those foreign currency assets. It does not relate to free funds.”

According to RBZ rules, ‘free funds’ are foreign currency received by individuals, international organisations, Non-Governmental Organisations and embassies. 

In terms of the rules and practice, holders of free funds in FCAs have been able to withdraw as much as US$1,000 foreign currency cash at a time.

The central bank only moved to calm frayed nerves on Monday afternoon, posting a couple of meek tweets three days after the FBC circular surfaced on social media platforms.

“The Reserve Bank of Zimbabwe would like to dismiss the social media reports suggesting that Nostro Accounts will be raided by the RBZ and Ministry of Finance and Economic Development,” the central bank said.

“This assertion should be dismissed with the contempt it deserves. There hasn’t been any change in the operation of Nostro Accounts.”

RBZ deputy governor Khuphukile Mlambo said Tuesday there had been no new policy directive from RBZ on FCAs, and that “fake media reports are making use of and quoting an exchange control order from June 2019, and doing so out of context”.

Although Zimbabwean depositors remain apprehensive about the fate of their foreign currency holdings in the banks, they held US$674 million in 134,000 FCAs at the end of December 2018, just two months after the separation of forex accounts from those denominated in local currency.

According to RBZ data in June, 97% of the value of FCAs was held by corporates. Just over 111,000 depositors, mostly individuals, held less than US$1,000.