Banks/Banking in Zimbabwe
Banking in Zimbabwe comprises of the Reserve Bank of Zimbabwe, eight merchant banks, seven commercial banks, six finance houses, seven discount houses, five building societies and one post office savings bank.
With respect to ongoing economic reforms, the new banking in Zimbabwe act was customized to enhance competition in the sector of banking. Apart from this, the Reserve Bank amended act strengthens the central bank supervisory role and makes it capable to adapt to new banking environment.
The financial sector in Zimbabwe is relatively well-developed. The Zimbabwe Reserve Bank administers monetary as well as exchange controls, besides being the sole bank of issue. In 1983, the Zimbabwe Development Bank was known to be the development finance institution.
There are ten merchant banks and five commercial banks operating in Zimbabwe. The commercial banks include Standard Chartered, Barclays, the Zimbabwe Banking Corporation, Stanbic and the Commercial Bank of Zimbabwe. The commercial banks in Zimbabwe maintain 20% statutory deposit ratio, while the post office saving banks is regarded to be the most important savings institution.
The merchant banks comprise of the First Merchant Bank, the Merchant bank of Central Africa, Syfrets Merchant Bank, Standard Chartered Merchant Bank and National Merchant Bank of Zimbabwe. The 1990s high inflation rates prompted government to print Zimbabwean dollars for $250 million so that the state is saved from the depreciating currency.
The monetary funds in 2001 included the currency as well as demand deposits termed as M1 to $2.4billion. The same year, M2 showed identical to M1 with an inclusion of small time deposits, savings deposits and money market mutual funds worth $3.3 billion. The money market rate that allowed financial institutions to one another was 21.52%. Similarly, the interest rate, the discount rate that the central bank gives for short term to financial institutions was 57.2%.
The financial sector liberalization and the Reserve Bank guidelines are designed to ascertain meeting of international supervisory regulations. Banks in Zimbabwe follow the guidelines on the capital adequacy mentioned for banks. The new guidelines and the introduction mark the Basle standards of capital adequacy. However, all banks in Zimbabwe are expected to be in compliance with 8%, the minimal capital adequacy ratio.