Unsecured rates are used for loans, which have no guarantee of payment, performance, satisfaction or opportunity for return from the recipient. Â
They are mainly used when banks have a shortfall on the amounts they would have lodged at the central bank for collection. Â
What the new figures mean is that banks will be forced to ring-fence liquidity to fund core banking operations, and avoid resorting to the RBZ seeking emergency funding. Â
Banks have been accused of diverting funds to the stock market, and sometimes to the parallel market, leaving significant loopholes in the banking system. Some analysts have viewed such practices as the source of the current cash crunch.
The central bank also announced that all requests for overnight accommodation require clearance by the Governor through a comprehensive application.
“The CEO should fully explain the origins and justifications for the shortfall, supported by documentary evidence.” Â
Banks have been blamed for the persistent cash shortages after failing to collect money due to illiquidity stemming from speculative practices. Â
Post published in: Economy