Barclays and Standard Chartered are among banks being asked to curb lending rates in Zimbabwe as the government puts pressure on the financial services industry to aid economic recovery.

A draft agreement between 23 banks and the Reserve Bank of Zimbabwe, a copy of which has been obtained by Bloomberg, stipulates that lending rates cannot be more than 10 percentage points above the companies’ cost of financing. This cost currently ranges between 1 percent and 7 percent while banks charge lending rates of as much as 25 percent.

There is a need to ensure “that bank charges and interest rates promote financial inclusion, stability and economic growth”, the central bank and the lenders say in the agreement, which is yet to be ratified.

The pressure to lower interest rates comes after Finance Minister Tendai Biti said in November last year that the country could amend its banking laws after financial institutions shunned central bank attempts to restart the country’s capital markets by selling treasury bills for the first time since 2008.

Under the terms of the agreement banks will also be compelled to pay customers an interest rate of at least 4 percent on term deposits of more than $1 000 (R8 500) and to design accounts with lower charges to cater for poorer customers. Zimbabwe’s annual inflation rate was 3 percent in November.

“The matter is still under discussion and we hope it will be finalised soon,” said George Guvamatanga, the president of the country’s bankers’ association.

Stanbic Bank of Zimbabwe, a unit of Standard Bank, is included in the agreement as are units of Nedbank, Ecobank Transnational and Old Mutual.

Barclays Bank of Zimbabwe is the biggest bank by market value on the Zimbabwe stock exchange. Its stock declined 35 percent from the beginning of last year to 28 US cents at close yesterday. Biti said four banks held 80 percent of deposits in Zimbabwe. – Godfrey Marawanyika from Bloomberg