HARARE – Zimbabwe's financial institutions are pleading with deep-pocketed clients to supply them with cash aimed at replenishing their nostro accounts as the country continues to grapple with a biting liquidity crunch.
Nostro accounts are accounts held in a foreign country by a domestic or local bank which are used to facilitate settlement of foreign exchange and trade transactions.
Bankers Association of Zimbabwe (Baz) president Charity Jinya yesterday told a Zimbabwe National Chamber of Commerce breakfast meeting that financial institutions were now operating on a “know your customer” basis to determine where to get cash for day-to-day business.
“There are two sources for banks to provide cash, which are export receipts or cash already in circulation . . . So in the current conditions where cash is not readily available and banks know that a customer has cash, banks will ask for the money so the two can add up so the cash continues to circulate,” she said.
This comes as Zimbabwe is presently reeling from cash shortages that have seen the central bank intervene through various measures to stimulate production and retain cash within the country’s borders.
Jinya was responding to questions on whether it was ethical for banks to ask for cash from clients so that they can service nostro balances as well as honour client international obligations.
Reserve Bank of Zimbabwe governor John Mangudya said the country was caught up in a unique situation that warranted desperate measures.
“Yes, it makes perfect sense for banks to ask for cash for nostro accounts. They are doing this because there is no cash in circulation, given the high externalisation rates. The money is not moving so banks cannot perform transactions like Telegraphic Transfers (TTs). They are now saying give us the cash to deposit in nostro accounts, which is very natural. There are no overdrafts. The country has been isolated for so long so this is the only way banks can get money,” he said.
Jinya — who is also MBCA Bank managing director — said given the present cash shortages on the market, banks were going to regulate withdrawal limits below the $1 000 prescribed by the central bank as they saw flexible.
“Given the cash shortages, every bank will look at its position and ration from the $1 000 if there is need on a basis of know your customer.
“We are part of an international community that requires us to be certain that the transactions we process are bona fide. So clients must not be surprised when they get limits lower than the $1 000 or when transactions take longer and questions are asked for seamless processing of transfers,” she said.
The Baz president said the delay in TTs was a direct result of the country’s trade deficit which has seen Zimbabwe importing more than it is exporting.
“When we have more imports than exports simple arithmetic indicates there will be delays in processing offshore transfers,” Jinya added.