Bond notes ease cash short­ages

Chronicle (Zimbabwe) - - National News - Oliver Kazunga Se­nior Busi­ness Re­porter Harare Bu­reau

POSB fined for leak­ing sur­ro­gate cur­rency pic­tures

BOND notes went into cir­cu­la­tion yes­ter­day, eas­ing cash short­ages at banks across the coun­try.

Re­serve Bank of Zim­babwe (RBZ) Gov­er­nor Dr John Man­gudya yes­ter­day said the cen­tral bank dis­bursed the bond notes onto the mar­ket smoothly. “We re­leased the bond notes worth $10 mil­lion and $2 mil­lion in $1 bond coins to ad­dress the chal­lenge of change. The dis­burse­ment was smooth although a cer­tain bank flouted reg­u­la­tions of the Bank­ing Act by ad­ver­tis­ing the bonds notes through so­cial me­dia plat­form be­fore we re­leased them,” he said.

Dr Man­gudya said the mon­e­tary au­thor­ity will take dis­ci­plinary mea­sures against the bank, which he did not name, for flout­ing bank­ing reg­u­la­tions. The bond notes were re­leased through the nor­mal bank­ing chan­nels in small de­nom­i­na­tions of $2 and $5 to fund ex­port in­cen­tives of up to five per­cent that will be paid to ex­porters of goods and ser­vices and di­as­pora re­mit­tances.

A snap sur­vey in Bu­l­awayo yes­ter­day showed that a num­ber of bank clients were able to with­draw their money in bond notes as well as the United States dol­lar.

An of­fi­cial at the Peo­ple’s Own Sav­ings Bank (POSB), cor­ner 13th Ave/Fort Street said the branch was is­su­ing hard cur­rency de­pend­ing on avail­abil­ity from the de­posits.

“We’ve re­ceived the bond notes from RBZ. Our liq­uid­ity sit­u­a­tion has im­proved a bit. Our clients are with­draw­ing money as per PEO­PLE’S Own Sav­ings Bank was yes­ter­day fined $500 000 by the Re­serve Bank of Zim­babwe for vi­o­lat­ing the Bank­ing Act af­ter its em­ploy­ees leaked pic­tures show­ing bond notes in the bank’s vaults on so­cial me­dia. The bank’s em­ploy­ees who com­mit­ted the of­fence were im­me­di­ately dis­missed from work.

Sec­tion 76(2) of the Bank­ing Act [Chap­ter 24:20] stip­u­lates that ex­cept with the per­mis­sion of the Re­serve Bank, no bank­ing in­sti­tu­tion or em­ployee or agent of a bank­ing in­sti­tu­tion shall dis­close any in­for­ma­tion pro­vided to it by the cen­tral bank in the per­for­mance of its func­tions.

In a state­ment yes­ter­day, RBZ Gov­er­nor Dr John Man­gudya, said the of­fence was com­mit­ted on Sun­day, a day be­fore the bond notes came into cir­cu­la­tion.

“More specif­i­cally, POSB un­law­fully and with­out per­mis­sion, took images of bond notes in its vaults and dis­trib­uted and pub­li­cised the images via so­cial me­dia,” he said.“The wrong­ful and de­plorable con­duct of POSB was also in de­fi­ance of ad­vice and warn­ing against such abuse

of­fi­cial with­drawal lim­its set by the cen­tral bank,” said the bank of­fi­cial.

The mon­e­tary au­thor­ity also in­tro­duced a $1 bond coin, which banks were also is­su­ing to their clients.

RBZ has pegged bond notes with­drawal lim­its at $50 a day and $150 per week. The notes are at par with the US dol­lar. Some of the clients at the POSB branch said the bank ran out of cash on Satur­day and they were not able to with­draw their money.

“Fol­low­ing the in­tro­duc­tion of the bond of bond notes made pub­lic by the Re­serve Bank through a press state­ment is­sue on 26 Novem­ber, 2016.

“The press state­ment was pre­ceded by a meet­ing be­tween the Gov­er­nor and chief ex­ec­u­tives of banks held on 25 Novem­ber, 2016 at which meet­ing it was em­pha­sised that abuse of bond notes and any in­for­ma­tion re­lat­ing thereto would not be tol­er­ated.”

Dr Man­gudya added: “POSB has thus abused and breached the con­fi­den­tial­ity and se­crecy it was en­joined to main­tain in re­spect of in­for­ma­tion and ma­te­rial pro­vided to it by the Re­serve Bank in the per­for­mance of its func­tions.

“The se­ri­ous of­fence com­mit­ted by POSB has im­pacted neg­a­tively on the in­tegrity and rep­u­ta­tion of the Re­serve Bank and caused un­nec­es­sary anx­i­ety and dis­com­fort in the mar­ket,” he said.

“The Re­serve Bank ad­vises the pub­lic that as a con­se­quence of the said trans­gres­sions, it has im­posed an ad­min­is­tra­tive fine of $500 000 on POSB. The em­ploy­ees of POSB who took, pub­li­cised and dis­trib­uted the images on so­cial me­dia have been dis­missed with im­me­di­ate ef­fect,” said the RBZ chief.

notes to­day, at least we are guar­an­teed that we will get some­thing to­day and we just hope this sit­u­a­tion will im­prove go­ing for­ward,” said Mr Japhet Ncube, a de­pos­i­tor.

At CABS, the bank’s clients at Fife Street branch were yes­ter­day be­ing al­lowed to with­draw $50 in bond notes and $50 in hard cur­rency. “At least we’re re­lieved, be­fore the in­tro­duc­tion of the bond notes, we were on many oc­ca­sions here (CABS) al­lowed to with­draw a max­i­mum of $50 a day but with the com­ing of the bond notes the with­drawal limit has im­proved to $100 a day. We just hope the sit­u­a­tion will get bet­ter go­ing for­ward,” said Ms Faustina Ncube.

Clients at the Na­tional Build­ing So­ci­ety (NBS) branch in Bu­l­awayo were also be­ing is­sued bond notes as the bank was re­port­edly said to have no hard cur­rency.

“As long as the bond notes are ac­cept­able lo­cally as we trans­act, l don’t have a prob­lem. Their in­tro­duc­tion has sort of eased the cash cri­sis. For ex­am­ple, imag­ine if they were not there, and the bank tells you that it doesn’t have hard cur­rency, you would walk away empty handed,” said a client at NBS, who pre­ferred not to be named.

Con­fed­er­a­tion of Zim­babwe In­dus­tries (CZI) vice pres­i­dent Mr Sife­lani Ja­bangwe said: “We haven’t heard of any­thing dra­matic that has hap­pened to our mem­bers as a re­sult of the bond notes, a clear sign that go­ing for­ward if the sit­u­a­tion con­tin­ues like this, the notes can aid in eas­ing the liq­uid­ity sit­u­a­tion. Cer­tainly, the mar­ket has been suf­fer­ing from liq­uid­ity cri­sis es­pe­cially those busi­nesses that deal with cash.”

The Govern­ment re­cently gazetted Statu­tory In­stru­ment 133 of 2016 which pro­vides a le­gal frame­work for the in­tro­duc­tion of bond notes as ac­cept­able le­gal ten­der in the coun­try.

SI 133 of 2016 Pres­i­dent Pow­ers (Tem­po­rary Mea­sures) Amend­ment of the Re­serve Bank of Zim­babwe Act, em­pow­ers the cen­tral bank to is­sue bond notes us­ing its pre­ferred de­sign, form and ma­te­rial. — @ okazunga

of­ten co­in­cide with the rainy sea­son which be­gins around Novem­ber and the fruit dis­ap­pears around De­cem­ber. Among other health ben­e­fits the fruit con­tains an­tiox­i­dants which boost im­mu­nity. In this pic­ture taken on Sun­day, a ven­dor pushes a cart full of the wild fruit along 9th Av­enue in Bu­l­awayo. — Pic­ture by Eliah Saushoma

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