Government must order a cut on bank charges and slash interest rates, Members of Parliament say.
Banks are charging too much for transactions, and interest rates of 200% are hurting businesses, MPs said during Wednesday’s question time in Parliament.
“Bank charges are too high…banks are making profits from bank charges, 79% of bank profit is coming from bank charges when the business of banks is selling money and therefore making money from interest. Surely, the Ministry of Finance must regulate or cap bank charges,” said Harare East MP Tendai Biti, a former Finance Minister.
Banks make 22.6% of their income from fees and commissions, according to data from the Reserve Bank of Zimbabwe’s latest half-year banking report. Lending made up just 19% of their incomes for the first half of the year. The bulk of banks’ income came from the revaluation of assets.
Opposition MP David Tekeshe added: “We are supposed to be getting interest when we bank our money but at the moment you bank your money and it is all eroded by bank charges.”
Responding, Deputy Finance Minister Clemence Chiduwa said government could not force banks to cut their charges.
“At the moment, we cannot direct them to reduce the bank charges but what we are saying is collectively as (Bankers Association of Zimbabwe), they need to re-look at their charges so that they are in line with the market and they need to make sure that they are competitive and seek for local solutions, especially for the software they are importing,” Chiduwa said.
On interest rates, Biti said rates of 200% would push the economy into recession.
He said: “Most people in this august House are farmers and businesspeople. The interest rate of 200% is unprecedented in the history of economics. High interest rates are driving this economy into a recession.”
To this, Chiduwa said the rates were needed to tame inflation and “nip the speculative bubble”.
Last weekend, Finance Minister Mthuli Ncube said interest rates must remain above 200% into 2023 to contain inflation, resisting pressure from businesses who say the high borrowing rates are stifling recovery.