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Zimbabwe: Banking Sector Restructure Leads To Basel II Adoption

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IMAGE: Dr John Mangudya, RBZ Governor »


In recent weeks, Zimbabwe has made persistent and targeted moves aimed at resuscitating its economy. The Reserve Bank of Zimbabwe (RBZ), in this spirit, has directed all banks to adopt the Basel II set of banking regulations used to regulate finance and banking worldwide.

The first quarter of 2015 has been set as the deadline for the switch to Basel II. Dr John Mangudya, RBZ Governor, indicated this in his recent maiden policy statement. “The Reserve Bank will conduct a final survey on the implementation progress during the quarter ending 30th September 2014 before banks go live using the Basel II compliant statutory returns beginning the first quarter of 2015,” he said.

The central bank has made a move to expedite this adoption by mandating that the processes be a part of the work of Internal and External auditors. “The Reserve Bank noted the need for banks to involve independent review units such as internal auditors as well as external auditors in the validation of the Basel II related systems and processes,” said Dr Mangudya.

In addition to regulating banking standards globally, the Basel II framework introduces a spectrum of banking‐related advantages including, according to experts, sound risk management, improved institutional liquidity, and the convergence of regulatory and economic capital.

This transition in Zimbabwe is timely given the recent failures in the banking sector resulting from sub‐optimal systems and processes. The most disturbing stories were that of shareholders meddling with clients’ deposits and appropriating loans to themselves which they couldn’t repay. With the move to Basel II, structures and processes to avoid such are expected to be erected across the entire banking sector.

Article Credit: Ventures-africa

Updated 5 Years ago

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Tags:     Zimbabwe     Dr John Mangudya     Reserve Bank of Zimbabwe