Legislators want directors of failed banks barred from opening new ones

04 Apr, 2024 - 00:04 0 Views
Legislators want directors of failed banks barred from opening new ones Trust Towers

eBusiness Weekly

Business Writer/NewZiana

The Depositors Protection Act should be amended to provide for executives and directors of failed banks to be barred from opening new ones and running for public office, according to the country’s legislators.

Debating a motion raised by Murehwa West Member of Parliament Farai Jere in the National Assembly on proposed amendments to the Depositors Protection Act on Tuesday, most legislators were unanimous that there are glaring gaps in the Act that need to be filled for it to adequately protect depositors.

Many depositors lost their savings when some banks closed in the past.

Former Deputy Minister of Finance, Economic Development and Investment Promotion and Zaka South MP, Clemence Chiduwa, said current legislation does not protect small depositors in the event of insolvency.

He said under the amended DPA Act, top bank executives and founders should face the music when their enterprises fail.

“The law should also bar such directors from taking public office and I am proposing again that as we amend the new DPA, there is need for us as an august House to ensure that those who presided over failed banks should not be allowed to re-open banks.

“Having looked at the DPA and what is obtaining on the ground now, we have seen that the new Insolvency Act does not cover the liquidation of banks. Already it shows that there is a gap there. In the event of the closure of a bank, the small depositors can only be protected through Presidential Powers. This is because we do not have the banks covered under the new Insolvency Act.

“So I am saying we need to close that gap. I am also proposing that going forward, the new law should bar directors, shareholders of failed banks from benefitting from their wrong doing. What is happening now is that those who presided over failed banks now need (to sell) a Toyota Vitz to compensate all the depositors and the residual assets are then given to the shareholders. I think there is need for us as this august House, to ensure that the depositors are protected,” said Chiduwa.

Dzivarasekwa MP, Edwin Mushoriwa, concurred with Chiduwa on the need to tighten penalties for failed bankers.

“We have had banks like Trust Bank, Time Bank, Barbican, Kingdom and ZABG amongst the banks that the Central Bank did close,” he said.

“We need to at least make sure that we come up with a mechanism of restoring confidence within the banking sector. If you do an analysis of all the shareholders of the banks that were closed, if you look at them, they are now 200 times richer than they were. They have simply taken advantage of our economy. They have taken advantage of the movement of our currency. Where the currency was depreciating, they have made sure that – when we came to 2019, they took advantage and were now in a position where they can easily pay off a debt which they were failing to pay,” he said.

Corban Madzivanyika, MP for Mbizo said the new Act should bring stiffer penalties to bankers who misuse depositors funds.

“We have also witnessed banking executives extending loans to their friends and companions without proper credit risk exposure analysis and after some few years, we are told the loans have now failed.

“We cannot have such kind of non-performing loans that are because of poor credit risk exposure management. In light of that Mr Speaker, I wish that the Deposit Protection Act be amended to proffer stiffer penalties in that instance,” he said.

Legislator for Gutu East, Benjamin Ganyiwa said the DPA should be amended to make sure anyone who loots depositors funds faces the music.

“We should not beat about the bush with this law. We should amend it accordingly to say if you misappropriate funds, you should face the consequences. We meet some of them in restaurants and they are very healthy. They have swipe cards and they get money on ATMs outside the country. Nothing has changed with them. I saw the other one on podcast, he was asked where the bankers’ money was and he said that one you can go and check with the Reserve Bank at the Deposit Protection Unit and they will tell you that I do not have any loan,” he said.

Nyanga South MP Supa Mandiwanzira, however, disagreed with his colleagues saying there was need to give individuals who fail another chance.

“Members that relate to how failed banks or failed bank executives must be treated, sometimes it is not the responsibility of bank executives in one particular bank. So to propose some suggestion that I have heard in the House that anyone who has been working for a financial institution or bank that has failed must not then be given any other opportunity in life to start another bank, would be extreme to have a law to that effect because what it means is that we are not allowing people to try,” he said.

“Anyone who has been in business understands that failure is an important aspect of business. You must fail in order to succeed.

Therefore, we must not have a law that makes our people afraid to even get into business.”

Share This:

Sponsored Links