THE Reserve Bank of Zimbabwe (RBZ), which is currently restructuring, says commercial banks have resorted to sourcing funds from the inter-bank market instead of raising dep
osit rates and mobilising deposits.
The RBZ said it was worried that commercial banks were also seeking cash from its dwindling coffers. It said the money market was currently experiencing severe liquidity shortages, yet by offering very low deposit rates, banks appear to be signalling that they do not require funds.
In the past one and a half months daily market shortages have averaged $40 billion, with shortages peaking at $90 billion in the first week of October this year.
“In spite of these shortages banks have resorted to sourcing funds from the inter-bank market, particularly from the central bank instead of raising deposit rates and mobilising deposits,” the RBZ said in its latest Weekly Economic Highlights.
It said reflecting increased recourse to overnight accommodation, banks’ borrowing from the RBZ had risen significantly from below $30 billion in September last year, to just under $100 billion by August this year.
“These high levels of borrowing from the central bank indicate some serious rigidity in the banks’ asset liability management practices as well as their reluctance to sufficiently reward depositors,” the bank said.
It said there was therefore need for commercial banks to embark on aggressive strategies of mobilising deposits and increasing the pool of national savings so as to ensure a sustainable long-term solution to the problem of cash and liquidity shortages.
“Whereas banks are quick to adjust lending rates in line with inflation and changes in other economic fundamentals, deposit rates have however significantly lagged behind other interest rates in the economy thus discouraging savings,” the RBZ said.