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BOB Governor worried about exorbitant bank charges

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Bank of Botswana (BoB) Governor,Linah Mohohlo has said thatBotswana should have a well developedand functioning interbank marketwhich will provide an enabling environmentfor funds of any quantum to fl owbetween and among banks and customers.She said this when giving a keynote addressat the launch of Bank of India (BOI)in Gaborone last Friday.“BoB’s efforts of fostering the developmentof an effi cient inter-bank markethave not yet borne desirable fruit. Theseefforts are frustrated, in part by the conductof some major banks which discriminateagainst other licensed commercial banks,for no apparent reasons. The unjustifi edconduct does not distinguish between interbankand other forms of lending activities.It is also anti-competitive and constitutesunwarranted discriminatory practice,” shesaid.She also noted that the banking sectoralso faces a challenge of imperfections inattracting long-term funds from institutionalinvestors.

 

The Governor indicated that,“there are cases where these market imperfectionshave resulted in fi nancial dealsfor long-term deposit placements at greatcost to some banking institutions, mainlybecause related contracts contain termsand conditions that are patently unfair andasymmetrical. Invariably, this practice undulyraises the cost of banking services tocustomers in general,” she said.As eloquently highlighted by the VicePresident Dr Ponatshego Kedikilwe on thehigh bank charges during the same weekat First National Bank (FNB) headquartersopening, Mohohlo said the insidious effectof these high charges is that they impedeprogress towards fi nancial inclusion. Furthermore,she said they discourage savingand the all-important activity of fi nancialintermediation.

 

Although the BoB and the country takespride in having a profi table and well capitalisedand regulated banking sector thatoperates in safe and sound environment,Mohohlo was quick to point out that theconcern about exorbitant charges shouldnot be construed to mean that bank profi tabilityis frowned upon. She said the sector,“can still be relatively profi table withinthe structures of prudential standards onsafe and responsible lending, without havingto unnecessarily impose high chargesfor the services rendered.” On the samenote, BOB is confi dent that BOI’s presenceshall also provide the added impetus to theCheque Imaging and Truncation project,the objective of which is amongst others toreduce the cheque clearance cycle.Furthermore, Mohohlo also hopes thatBOI will have an important role in contributingto the national policy on economicdiversifi cation by supporting diamond andrelated business ventures. “I trust that theentry of BOI in the country’s banking sectorwill contribute positively to the country’sefforts to enhance access to fi nancialservices by all segments of the population,”she said.

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