The Reserve Bank of Zimbabwe has banned loans to shareholders and directors of banks and is planning to amend the Banking Act to make it possible to prosecute shareholders, directors or senior managers who act negligently or fraudulently resulting in loss of money by depositors or failure of banking institutions.
This was said by the central bank acting governor Charity Dhliwayo in her monetary policy statement today.
She said the move had been taken because the level of insider loans was disturbing. Insider loans totalled $175.3 million as at 31 December 2013 and 67 percent of them, $117.4 million, were non- performing loans.
Previously, the Reserve Bank would net out insider loans from banks’ capital but this measure was not effective in deterring banks from extending insider loans.
The central bank had therefore introduced the following measures with immediate effect:
The central bank was also amending the Baking act as follows:
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