To: Chief Executive Officers/ Managing Directors
All Banking Institutions, Development Finance Institutions, Deposit-Taking Microfinance Institutions and Credit-Only Microfinance Institutions
RE: RESOLUTIONS OF THE MONETARY POLICY COMMITTEE MEETING HELD ON 24 JUNE 2022 & PRESS STATEMENT OF 17 JUNE 2022
1. We refer to the Press Statement of 17 June 2022 issued by the Governor, on Outcome of Investigation of Abuse of Commercial Bank Loan Facilities by Certain Business Entities and the Monetary Policy Committee Statement of 27 June 2022.
2. Effective 1 July 2022, all banking institutions, development finance institutions, deposit taking microfinance institutions and credit only microfinance institutions are required to ensure that all existing and new loans are extended at an interest rate not below the new Bank policy rate of 200% per annum except for loans drawn under the Medium Term Bank Accommodation Facility, the Micro, Small to Medium Enterprises Facility (MSMEs) and individuals, which shall be extended at a rate not below the Medium Term Accommodation interest rate of 100% per annum. Please note that this new interest rate does not apply to loans covered under employment contracts.
3. Banking institutions are further advised that, effective 1 July 2022:
a) the minimum deposit rate for ZW$ savings has been reviewed upwards from the
current 12.5% to 40% per annum;
b) the minimum deposit rate for ZW$ time deposits has been increased from 25% to 80% per annum; and
c) statutory reserve requirements have been maintained at the current levels of 10% for demand and call deposits and 2.5% for savings and time deposits.
4. In addition, banking institutions are required to:
a) Implement appropriate due diligence measures to ensure that borrowing by
holding companies for purposes of funding their subsidiaries are properly justified,
in line with the Banking Act [Chapter 24:20] and Banking Regulations S. I. 205
of 2000 and that the loans are used strictly for the intended purposes;
b) Ensure that, in line with the sanctity of contracts, no other person may borrow
on behalf of another;
c) Put in place effective credit risk management, including loan monitoring and
enforcement of loan covenants, client visits and other measures to ensure that
borrowings are used for the intended purposes;
d) Comply with the prescribed prudential lending limits provided under the Banking
Regulations SI 205 of 2000;
e) Ensure that boards of directors enhance their oversight on the management,
reporting and performance of large exposures and group exposures; and
f) Ensure that all lending activities are conducted in line with banking institutions’
credit policies, the Banking Act [Chapter 24:20] and Banking Regulations
Statutory Instrument 205 of 2000.
5. The Reserve Bank will continue to monitor conduct of banking business through existing supervisory tools, to ensure compliance and adherence to regulatory requirements.
6. Please note that all banking institutions and deposit-taking microfinance institutions are required to include the compliance status with the minimum lending rates and minimum deposit rates through the Quarterly Compliance Self-Assessment Report due as at 30 June 2022 and on a quarterly basis.
7. We advise accordingly.
Yours faithfully,
……………………………………
P. T. Madamombe
Registrar of Banking Instit
