This should tell Finance Minister Mthuli Ncube and the Reserve Bank of Zimbabwe not to spring major policy shifts on everyone the way they did with the re-introduction of the Zim Dollar and the effective ban of forex transactions locally.
RBZ contradicting self
In their directive to banks yesterday the RBZ said in paragraph 3.4:
Funds in all these accounts listed in Table 1 above will retain their foreign currency status and shall continue to be utilised for the settlement of international transactions. In cases where the holder of such an account intends to settle domestic transactions, they shall be required to liquidate their foreign currency account balances to the interbank on a willing seller willing buyer basis.
A few paragraphs down in paragraph 4.3 they said:
For individuals, the current policy shall remain in force with Authorised Dealers also required to apply the usual KYC and AML/CFT standards
Some banks decided to just say no
At four banks we asked, they were not allowing individuals to withdraw out of their nostro accounts. Some were saying this is until further clarification from the central bank. There was one bank though that was facilitating withdrawals by individuals.
The RBZ clarification
The central bank has issued another statement specifically regarding individual nostro account withdrawals:
For corporates, banks shall apply the KYC principle for any intended cash withdrawals.
The current withdrawal limit for individuals remains US$1000 per day.
Individuals are still able to withdraw their cash from their individual accounts and banks are, in line with international best practice, expected to apply the AML/CFT principles.
Further to our Directive, the Reserve Bank wishes to advise that contrary to certain information being circulated on social media, cash withdrawals by individuals are still permissible and the policy position hasn’t changed.
Risk of a run on the banks
The inconsistencies and unclear roll out of the multicurrency ban may cause those with nostro account to make a run for banks demanding withdrawals. This is always unwanted because banks may not always have everyone’s money in an instance. Being turned away at the bank will fuel the run further and the cycle gets worse at every turn.
The impact of this is limited though in Zimbabwe right now because according to December statistics given by the Reserve Bank of Zimbabwe, 97% of money in nostro accounts was in corporate accounts. Businesses are not being allowed to withdraw that money as cash.
Should you trust?
I wouldn’t trust the central bank. They have made and broken too many promises in a space of less than 3 years. It’s sad for me to take this position but this is my genuine sentiment.
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14 comments
It would have helped if you mentioned the banks which were refusing to honour withdrawals
My belief is that these banks were just confused and decided to play safe. Can’t blame them. So because I don’t think it’s a sinister move by them, I decided not to drag them in the public’s glare. Am convinced they will revise this position soon if they haven’t done so already
Sound reasoning there mate. No point in worsening the situation. My considered view is that instead of all of us trying to put spanners in the works which after all is an own goal, we can just try to help make things work. That way we may just achieve 80% of our objectives,the 20% effort being just to comply. Granted public confidence is low but is it not better to have a plan than no plan at all? The ambush was unconfortable but Franky I think telegraphing the forex ban would have been self-defeating. As you say, banks will come round. Fact: black market is bad. Normalcy is good, it levels the playing field for us honest citizens. Fair enterprise but no unjust enrichment.
Yeah can you indicate the banks. No speculation guyz
What are the banks that are doing that. They can be sued because they are going against the rule of law
Out off interest tinashe were you in a USD salary. I personally run a business and were charging both USD and bond…. Situation was untenable.. People wound want to buy from the supermarket…. Change the USD at a ridiculous rate just to gain arbitrage… Nandita on Friday USD only… untenable
Oh I think USD pricing was killing demand but market forces can self correct on such things…
My biggest issue is that those that have hard currency must be allowed to access it because they have so much they are having to solve for themselves.
I gave an example in another article: my nephew had second degree burns a few weeks back (pretty bad). There were special bandages needed to dress his wounds and those were not available in Zim. We bought from SA. Very serious life and death situation, he risked getting an infection and he is less than 2!
Now, imagine if indeed we had the money but it was stuck in a nostro account only to be withdrawn as Zim dollar which we can’t use in SA…
Zimbabwean families have to solve a host of problems like this one and so telling them that they should not access their forex because that is the situation in other countries when Zimbabwe is nothing like those other countries is not fair at all
There is no contradiction in what RBZ communicated Tinashe. The first statements are general policy and then it is later clarified for the purposes of specific transaction classes. Nothing amiss there. Let’s remove the coloured glasses before we read these pronouncements and directives then comment with clear understanding.
This applies equally to banks and media/social commentators
I concede you are right there.
Could have been avoided though if it were not an “with immediate effect thing.”
It’s pretty straight forward to me. You can withdraw but the bank decides if you will withdraw.
I lost my trust in this govt and the banks decades ago when I lost my children’s savings with Royal bank. I am not about to change now. I use the bank account for salary purposes otherwise I prefer to keep my money on me or EcoCash. A lot needs to happen before I can review this personal policy.
U must trust the banks and the chefs ortherwise you are not patriotic. You see comrades this move also enables patriots who fought in the struggle to get rich and live with the Murungus in MuBorrowdale which is what they deserve.
KYC know your customer, how does it work as long as I have my nostro with a bank! the bank should know me. Policy inconsistency and subjectivity creates impartiality and disfavor. I hope this development will be applied with sincerity and does the good of the populace otherwise it’s another huddin detriment to more mulnourishment of the masses.