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In January 2004, the Finance Laws Amendment Act was passed, which requires the licensing of non-banking financial institutions. Those institutions not licensed by the Reserve Bank should be dissolved in accordance with the Companies Act.
General Participation in the Financial Services Market
A banking institution that conducts banking business in Zimbabwe and whose business mainly consists of the acceptance of deposits withdrawable by check or otherwise (Banking Act, Article 2)
A banking institution that conducts banking business in Zimbabwe and whose business consists mainly in hire-purchase financing, financial leasing or factoring (Banking Act, Article 2)
Private companies limited to 35% foreign ownership, for companies listed on the Zimbabwe Stock Exchange a maximum of 40% foreign ownership with no single foreign shareholding owning more than 10%
Non-bank Financial Institutions
Building Societies
Companies Act Chapter 24:03
Registrar of Companies, Registrar of Banking Institutions (Banking Act, Art. 4)
Public or private company
Private companies limited to 35% foreign ownership, for companies listed on the Zimbabwe Stock Exchange a maximum of 40% foreign ownership with no single foreign shareholding owning more than 10%
Finance Houses
Companies Act Chapter 24:03
Registrar of Companies, Registrar of Banking Institutions (Banking Act, Art. 4)
Public or private company
Private companies limited to 35% foreign ownership, for companies listed on the Zimbabwe Stock Exchange a maximum of 40% foreign ownership with no single foreign shareholding owning more than 10%
Non-bank Financial Institution
Companies Act Chapter 24:03
Registrar of Companies
Cooperatives/Credit Unions
Cooperative Societies and Credit Union
Companies Act Chapter 24:03
Registrar of Companies
Cooperative Society or Credit Union
Licensing Requirements and Standards
Standards for ownership officers
Feasibility study/business plan
Audit of Proposed Founders, Owners, Officers
Banks
Commercial Banks
Fit and proper test applied; must have sufficient qualifications and experience. Must also submit profiles of the top 3 executives from all departments. (Banking Act Chapter 24:20 (Banking Act), Art. 8)
Business plan required at application (Banking Act, Art. 8)
Details of authorized and paid-up share capital required at application (Banking Act, Art. 8)
Non-bank Financial Institutions
Building Societies
Fit and proper test applied; must have sufficient qualifications and experience. Must also submit profiles of the top 3 executives from all departments. (Banking Act, Art. 8)
Business plan required at application (Banking Act, Art. 8)
Details of authorized and paid-up share capital required at application (Banking Act Art. 8)
Finance Houses
Fit and proper test applied; must have sufficient qualifications and experience. Must also submit profiles of the top 3 executives from all departments. (Banking Act, Art. 8)
Business plan required at application (Banking Act, Art. 8)
Details of authorized and paid-up share capital required at application (Banking Act Art. 8)
Capital and Reserves
Minimum capital
Minimum capital adequacy/gearing ratios
Forms of capital recognized
Banks
Commercial Banks
US $89,000 (500 million ZD)
Minimum capital adequacy will be adjusted as of September 30, 2004.
10% CAR
Authorized and share capital
Non-bank Financial Institutions
Building Societies
10% CAR
Finance Houses
US $53,000 (300 million ZD)
Minimum capital adequacy will be adjusted as of September 30, 2004.
10% CAR
Risk Management Guidelines
Guidelines & restrictions on financial services
Guidelines & restrictions on operational rules
Guidelines & restrictions on interest rates
Concentration of risk
Connected/insider business
Banks
Commercial Banks
Permitted: Receiving deposits, extending credit, buying and selling instruments, money transmission services, buying and selling foreign currency, issuing and administering means of payment, money brokering, safeguarding valuables, portfolio management, financial leasing, hire-purchase contracts, buying and selling shares for customers, credit reference services
Prohibited: Buy its own shares, loans against shares, non-banking business w/o permission of the Reserve Bank of Zimbabwe
As of January 2005, all banking institutions will be required to be rated by an internationally recognized rating agency.
Not restricted; however, targeted concessional finance facilities interest rate is held lower than inflation at 30% to encourage concessional rates to productive enterprises
Large exposure to capital ratio: 800% maximum
Credit to insiders cannot be granted on more favorable conditions than offered to outsiders. (Banking Act, Art. 35)
Non-bank Financial Institutions
Building Societies
Permitted: Mortgage financing, building societies can acquire land for purposes of erecting buildings for sale, and enter joint ventures with the local authorities or other persons for the purpose of erecting buildings, roads, storm water drains and sewage systems and such amenities
As of January 2005, all institutions will be required to be rated by an internationally recognized rating agency.
Large exposure to capital ratio: 800% maximum
Credit to insiders cannot be granted on more favorable conditions than offered to outsiders. (Banking Act, Art. 35)
Finance Houses
Permitted: Hire-purchase financing, financial leasing or factoring
As of January 2005, all institutions will be required to be rated by an internationally recognized rating agency.
Large exposure to capital ratio: 800% maximum
Credit to insiders cannot be granted on more favorable conditions than offered to outsiders. (Banking Act, Art. 35)
Non-bank Financial Institution
Permitted: Credit only
Prohibited: deposit taking
Reporting and Supervision
Supervision Method
Disclosure and reporting requirements
Depositor protection mechanisms (e.g., deposit insurance or lender of last resort)
Banks
Commercial Banks
On and off site supervision in accordance with Basel Core Principles for Effective Supervision.
Deposit Protection Fund established by Banking (Deposit Protection) Regulations, 2003
Credit Guarantee Company Ltd.: Jointly owned by RBZ and 8 commercial banks. Provides guarantees on SME loans provided by commercial banks. CGC guaranteed loans are provided at concessional interest rates.
Troubled Bank Fund established in January 2004.
Non-bank Financial Institutions
Building Societies
On and off site supervision in accordance with Basel Core Principles for Effective Supervision.
Deposit Protection Fund established by Banking (Deposit Protection) Regulations, 2003
Credit Guarantee Company Ltd.: Jointly owned by RBZ and 8 commercial banks. Provides guarantees on SME loans provided by commercial banks. CGC guaranteed loans are provided at concessional interest rates.
Troubled Bank Fund established in January 2004.
Finance Houses
On and off site supervision in accordance with Basel Core Principles for Effective Supervision.
Deposit Protection Fund established by Banking (Deposit Protection) Regulations, 2003
Credit Guarantee Company Ltd.: Jointly owned by RBZ and 8 commercial banks. Provides guarantees on SME loans provided by commercial banks. CGC guaranteed loans are provided at concessional interest rates.
