Banks to be given immunity over FCA accounts raided by RBZ

Financial institutions whose foreign currency accounts were raided by the central bank as it funded government operations at the height of the country’s hyperinflationary phase will be accorded protection against litigation from depositors, finance minister Patrick Chinamasa said today.

Giving oral evidence on the RBZ Debt Assumption Bill to a parliamentary committee on economic planning and development, Chinamasa said banks would be granted immunity from any litigation if the bill were to become law.

The bill proposes that government takes over the central bank’s $1.1 billion debt — owed to banks, the private sector and non-governmental organizations — to remove the encumbrance and allow it to play its role as the lender of last resort.

The Bankers Association of Zimbabwe (BAZ) has pleaded with Government for immunity after some depositors obtained court orders for restitution of funds raided by the central bank from their bank FCAs.

“I have no problem to extend immunity to the commercial banks. It is important that as we approach this matter we be fair to those that are owed these monies, some of them went under,” said Chinamasa.

“The Reserve Bank acted as an agent and should have never put those debts on its balance sheet. It is our (government) responsibility that we take over the debts as long as they are validated and verified.”

In October 2013, the High Court ordered Standard Chartered Bank to refund China Shougang International, which lost $48 000 when the central bank dipped into its Foreign Currency Account, raising fears the financial sector could be the target of thousands of potential lawsuits.

The central bank accepted liability for the funds, but local financial institutions wanted guarantees that they will not be sued.-The Source

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