Zim to prosecute negligent bankers

New measures by the Reserve Bank of Zimbabwe (RBZ) will criminalise directors of banking institutions for acts of fraud and negligence. Presenting the 2014 Monetary Policy Statement on Wednesday, acting RBZ governor Charity Dhliwayo said the new provisions will seek to introduce criminal as well as civil liability of any shareholder, director or senior manager of a banking institution found to have acted negligently or fraudulently, resulting in loss of money by depositors or failure of a banking institution. “While directors have common law duties to the company, the new provisions will extend a fiduciary duty of care to the customers,” said Dhliwayo. As part of the new measures, Dhliwayo said no bank shall grant loans to insiders and related interests, except where such credit is granted as part of the employees’ conditions of service and is available to other employees. She added that existing insider loans should not be renewed or rolled over, and banking institutions should take measures to ensure repayments are made in terms of the facility. The measures come on the back of what she called a worrisome development within the Zimbabwean banking sector. “The growth in non-performing loans within insider loans is a worrisome development. Notably, as at 31 December, 2013, the level of total insider loans in the banking system was US$175.3 million (N$2 billion). “Of these insider loans US$117.4 million (N$1.3 billion) (66.97%) was non-performing,” she said. Dhliwayo also said that the Reserve Bank will by March 31 issue an enhanced fit and proper person assessment framework clearly setting out the parameters for ongoing fitness and probity assessments of directors and senior management. Since dollarisation, several Zimbabwean banks have collapsed after directors and major shareholders converted depositors’ funds for their own use.