The Reserve Bank of Zimbabwe (RBZ) shot down an urgent request by commercial banks to raise interest rates and transaction charges at a crisis meeting held in Harare last week, arguing the move would trigger inflationary pressures, the Zimbabwe Independent can report.
In the face of rapidly rising costs after bank workers demanded and won a 42% hardship allowance to cushion them from the spiralling cost of living, the banking sector approached the central bank for permission to increase fees.
Some banks have backdated allowances to January after the Zimbabwe Banks and Allied Workers' Union (Zibawu) threatened to withdraw labour, citing biting economic pressures.
Prompted by concern that the 42% wage increase would eat into banks' static earnings, the financial institutions called an urgent meeting with the central bank.
Banks' income emanates from core lending activities and other non-funded sources such as fees and commissions.
Sources close to the developments say the RBZ was firm in its stance and shot down the proposal from banks to increase fees and interest rates, noting that such a move would result in spiralling inflation, currently hovering above 40%.
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