To read in the press that there are loan sharks; one of Asian descent and another of British origin, who claim to be the lenders-of-last-resort really made sad reading. Our central bank needs to be capacitated to the right levels so that the lender-of-last-resort in terms of capacity remains within its control.
In a country where liquidity challenges are the order of the day, capitalisation of banks needs serious scrutiny by the central bank. With sanctions imposed on the country thereby increasing the country’s risk profile, lines of credit cannot be granted to the country as well as to companies within. So, for the central bank to have directed that merchant banks and commercial banks be capitalised to the tune of US$10m and US$12,5m is asking for too much under the circumstances.
It only serves to expose indigenous owned banks to the loan sharks who are seeking to enrich themselves. Just as the loan sharks have said over and over again, the banks will approach them for funding and the conditions thereof will not be favourable resulting in the RMB saga.
In my view, the central bank may need to relax this requirement until sanctions are lifted and banks are able to access lines of credit from outside the country with favourable conditions.
Deposit flight from locally owned banks is most likely as the banking public will seek to protect their hard earned money at the expense of the existence of the very same banks.
Juju Chivi, Harare.
