Barclays welcomes govt’s decision to close most accounts with commercial banks
GOVERNMENT’S decision to close most of its accounts with
commercial banks this year will level the playing field among banks in the
Bank Southern Africa region managing director Zafar Masud has
The government this year plans to cut borrowing from the
banking sector and introduce a single treasury account to help bring down
interest rates and encourage banks to mobilise savings.
Commenting on the
development, Masud said huge government money made some commercial banks get
unfair advantage over others in terms of mobilising savings.
Barclays Bank welcomed the government’s decision.
government is the one that uses that fund as well. So, it’s okay if the
government needs to…in fact, that will be good for industry because then it
gives even playing field to everyone,” Masud said in a recent interview. “Right
now, what’s happening now is that there are some banks who get more government
funding more than the others. No it won’t affect liquidity in the market as long
Bank will manage the liquidity well which I am very sure they
The government which currently borrows an average of K620 billion
in treasury bills and government bonds per month had announced plans to reduce
borrowing from the banking sector in 2010 and introduce a single treasury
account to help bring down interest rates and encourage banks to mobilise
of Finance said commercial banks did not need to take risks by lending money
to the private sector when the government was borrowing at high interest rates
and offering risk-free investment.
“The government will retire a
substantial amount of maturing bonds and treasury bills next year. This, I hope
will enable commercial banks to lend to the private sector," stated the Ministry
of Finance recently. “As a response to this, the government has decided to
establish a single treasury account next year. This means that most government
accounts in commercial banks will be closed.”
Treasury observed that
commercial banks relied on government deposits rather than trying to lure
savings and that the government was also concerned about the increasing spread
between lending and savings interest rates.