Short-term deposits continue to affect lenders

Short-term deposits continue to affect lenders
Published: 16 August 2017
THE country's broad money supply continues to be dominated by short-term deposits, a factor that constrains the local financial services sector's capacity to lend to critical sectors of the economy on long-term basis.

'Broad money' basically refers to the measure of money supply that includes physical money such as currency and coins, demand deposits at commercial banks and any other monies held in easily accessible accounts.

According to the Reserve Bank of Zimbabwe (RBZ)'s latest review for the week ended August 4, 2017 broad money supply was dominated by one month and three months tenor deposits.

"Average deposit rates for deposits of 1 month tenor declined by 0, 03 percentage points to 4, 04 percent.

"Deposits rates for savings deposits and deposits of 3 months tenor, however, remained unchanged at 4, 35 percent and 4, 24 percent, respectively, during the same week," noted the RBZ.

Long-term deposits are essential for any country's banking sector insofar as banks can then convert those savings into larger amounts of credit, which is important for lubricating the economy in various forms, for instance, as trade credit or working capital, analysts say.

RBZ governor Dr John Mangudya recently said Zimbabwe currently has around $1, 5 billion "usable dollars" in Real-Time Gross Settlement (RTGS) balances, hence should have 40 percent (or $600 million) of that amount as foreign currency in nostro accounts.

He added that the country has around $350 million in its nostro accounts, against the ideal target of $600 million, which was resulting in the cash shortages and fuelling cash premiums on the parallel market.

The central bank also noted that during the week under review weighted lending rates for corporate clients, however, declined by 0, 01 percentage points, from 7, 05 percent recorded in the previous week to 7, 04 percent, during week under analysis.

Meanwhile electronic transactions during the period under review were weaker from the previous week, a development the RBZ attributed to a decline in RTGS transactions.

Transactions processed through the RTGS system declined 7 percent to close the week at $1, 16 billion. This marginally dragged down the total value of transactions processed through the National Payment Systems (NPS) to $1 682,35 million from $1 682,83 million in the prior week.

NPS transaction volumes stood at 21 099 548 during the week under review, up from 17 519 362 recorded in the previous week. The distribution of NPS transaction volumes was dominated by mobile at 70, 37 percent; point-of-sale (POS) at 28, 20 percent, and Automated Teller Machines (ATMs) at 0, 74 percent.

RTGS and cheque contributed 0, 65 percent and 0, 03 percent, respectively. In value terms NPS transactions were led by RTGS at 68, 98 percent, while mobile contributed 18, 02 percent and POS came in at 12, 53 percent. Cheque contributed 0, 07 percent in value and ATMs 0, 40 percent.
- bh24
Tags: Deposits,


Latest News

Latest Published Reports

Latest jobs