Align bank charges in line with exchange rate activity, CCZ urges banking sector

CONSUMER Council of Zimbabwe (CCZ) has expressed the need for the banking sector to align bank charges in line with exchange rate movements in the economy and also explore possibilities of benchmarking charges with prevailing regional rates.

In an analysis of the mid-term monetary policy statement, CCZ chief executive officer Mrs Rose Mpofu said CCZ appreciates the action taken by the central bank along with the Bankers Association of Zimbabwe in monitoring bank charges in order to strike a balance between business viability and the provision of affordable and accessible products and services in the spirit of promoting financial inclusion.

She, however, said there is a sentiment from consumers that the charges are still prohibitive when compared to the region.

“You will note that foreign currency deposits accounted for 88 percent of total deposits as at 30 June 2023 indicating the dominance of foreign deposits in the market.

“As such, CCZ sees the need for the banking sector to review its pricing model in line with these developments since the currency mixture has dramatically changed and taking cognisance of the relative exchange rate movements in the economy,” said Mrs Mpofu.

“There is a need for banks to immediately review the current pricing model and adhere to fair business practices in line with the Banking Act, and the Consumer Protection Framework. There is also a need to consider whether to benchmark our charges with that of the region or with those countries whose transactions are dominated by the US dollar or currencies of almost equivalent value to the US dollar.”

In his recent mid-term monetary statement, Reserve Bank of Zimbabwe (RBZ) governor, Dr John Mangudya said having regard to the need to strike a balance between business viability and the provision of affordable and accessible products and services in the spirit of promoting financial inclusion, the Bank continues to monitor bank charges, in collaboration with the Bankers Association of Zimbabwe.

“Against this background and cognizant of the relative exchange rate stability in the economy, the pricing model agreed between the Bank and Bankers Association of Zimbabwe in May 2022 will be maintained.“The said pricing model allows consideration of a review periodically, having regard to factors affecting such pricing including exchange rate movements. The Bank will continue to monitor the terms and conditions of business activities to ensure adherence to the pricing model, fair business practices and reasonable pricing in line with the Banking Act, and the Consumer Protection Framework,” he said.

In the analysis, CCZ commended Government intervention in stabilizing the economy which has seen exchange rates declining.
The council however expressed concern over some businesses who are pegging prices at exorbitant exchange rates.

“CCZ commend the tight monetary stance pursued by the Central Bank during the first half of the year 2023 and its continuation to sustainably anchor inflation and exchange rate expectations.

“However, it is vital to note that the prices in the market have not been adjusting proportionate to the appreciation of the local currency. In fact, the price surveys indicate that most supermarkets or shops are not complying to the stipulated exchange rates of ask rate plus 10 percent,” said Mrs Mpofu.

She called for a taskforce composed of key stakeholders including the President’s Office, central bank, Ministry of Industry and Commerce, the CCZ and sectoral regulators to be set up.-chronicle