Banks face Dec 31 deadline on financial inclusion

Banks have up to December 31 to submit three-year board-approved financial inclusion plans as the central bank moves to bring the unbanked into the formal system.

In July Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said banks should share infrastructure to cut on costs and be able to offer low-cost deposit accounts.

He said RBZ would make it mandatory for new applications for banking licences to be accompanied by credible financial inclusion plans as part of the licencing criteria. Banks have played second fiddle to mobile money which has tapped into the previously unbanked market. Banks stand accused of neglecting the unbanked by failing to come up with products that cater for the lower segment of the market.

A recent Market Access Possible diagnostic report showed that mobile money grew by 72% in 2014. It said banks’ contribution to financial inclusion had declined.

The report showed that people trust mobile money operators more than banks because they haven’t lost money so far through that system.

Finance minister Patrick Chinamasa said at the launch of the report that its findings were an eye opener and Treasury would go back to the drawing board to revise its financial inclusion plans.

“You have confirmed the capacity of commercial banks to adapt to change. Clearly, they are not adapting, my misgiving about this sector is they are like ostriches, sinking their head in the sand and are not giving attention to what is happening around them,” he said.

Chinamasa said the balance sheets of most banks were skewed towards bank charges and not from interest income indicating that they were lending less and less.

SOURCE:NEWSDAY