Bank interest draws more deposits
Harare (New Ziana) – Bank deposits for both foreign and local currencies have gone up significantly after these started attracting interest last year, a top banking official said on Wednesday.
Since July, banks have been offering five and 10 percent interest per annum on Zimbabwe dollar savings and fixed term deposits respectively, in a bid to attract savers.
On the other hand, for US dollar deposits, they offered one and 2.5 percent interest on savings and fixed deposits respectively.
Bankers Association of Zimbabwe president, Ralph Watungwa told New Ziana interest on bank deposits had lured more individuals and businesses to keep money in banks.
“The liabilities which are the deposits from customers have been going up all along both in (US) dollars and in local currency. So yes, people are still depositing cash,” he said.
“We agreed on a payment platform for interest rates on various products including savings accounts. Maybe that is what is causing deposits in local currency to go up because we do pay interest on savings accounts which is the most important thing,” he said.
Watungwa said interest rates paid by local banks on US dollar deposits were, apparently, higher than in most other markets.
He said bank interest was an incentive for people to deposit money, and it was important the country had recognised the need for this.
In the past, banks offered virtually no interest on most of their products; instead steep levies on the deposits often resulted in depositors losing money stashed in banks.
As a result, most people preferred to keep their savings under the pillow in homes, than to bank the money.
Watungwa said it will take time for depositors to be fully confident of banking their savings, but a good start had been made since last year.
“Building confidence is a long haul, I think it will take time,” he said.
According to the Reserve Bank, Foreign Currency Account balances grew from US$1,13 billion in September 2020 to US$1,72 billion in September 2021, an indication the public’s confidence in the banking sector was slowing returning.