Source: Stop abusive lending practices, banks told – herald
Oliver Kazunga
Senior Reporter
THE Reserve Bank of Zimbabwe has moved to stop abusive lending practices, warning banks and microfinance institutions against trapping borrowers in unsustainable debt, seizing ATM cards and using unfair debt recovery methods.
Speaking at the inaugural Regulators Forum organised by the Consumer Protection Commission in Harare last week, RBZ microfinance division registrar Mr Simbarashe Mashonganyika said financial institutions that kept on extending loans to already over-indebted customers or employed unfair collection tactics risked regulatory action as Zimbabwe strengthened consumer protection across the financial sector.
Financial institutions, he said, had a responsibility to assess a customer’s repayment capacity before approving credit and should reject loan applications where further borrowing would worsen the client’s financial position.
Mr Mashonganyika said the central bank had identified over-indebtedness as one of the biggest threats facing consumers as some lenders continue approving loans despite clear indications that borrowers are already financially overwhelmed.
“We require that before they give out a loan, they must make sure that the intended borrower is not going to be over-indebted and they must be able to refuse a loan application when, from their assessment, they know that their loan is not actually going to make the situation better,” said Mr Mashonganyika.
Against this background, RBZ was rolling out market conduct supervision — a new regulatory framework introduced in 2024 to ensure banks and microfinance institutions treat customers fairly and responsibly
He said the monetary authority also condemns what it describes as unacceptable debt recovery practices that have been reported in parts of the microfinance sector.
Among the abuses highlighted were incidents in which loan collectors allegedly waited for borrowers on pay day to recover outstanding debts immediately after salaries had been paid.
“And sometimes we also have stories of institutions that were actually collecting the ATM card or the debit card of every borrower waiting at the end of the month when the loan is now due; they are the first to go and take money from the ATM.
“Now we have seen that those issues can actually be reduced,” said Mr Mashonganyika.
Such practices, he said, run contrary to the principles of fair and respectful treatment of customers and have no place in a properly regulated financial system.
He said banks and microfinance institutions are expected to conduct business transparently by fully disclosing interest rates, charges, fees, repayment schedules and all terms and conditions before customers sign loan agreements.
And to ensure consumers fully understand the products they are taking up, institutions are also expected to communicate information in languages understood by their clients, including local languages where necessary.
Mr Mashonganika directed financial institutions to safeguard customers’ personal information and establish effective internal complaints handling systems to resolve disputes promptly.
“Where customers remain dissatisfied after exhausting internal processes, they can escalate their complaints to the RBZ’s consumer complaints unit for investigation and resolution,” he said, adding that market conduct supervision marks a significant shift in financial sector regulation by focusing not only on the financial soundness of institutions but also on how they treat their customers.
Meanwhile, in the 2026 Monetary Policy Statement, RBZ Governor Dr John Mushayavanhu indicated that the banking sector remained profitable and recorded aggregate profit of ZiG8,77 billion (US$337,65 million) for the year ended 31 December 2025, compared to ZiG26,68 billion (US$1,03 billion) reported in the corresponding period in 2024.
He said the quality of earnings had, however, improved as a result of stability in the local currency in 2024.
In 2025, the microfinance industry expanded the branch and agents network to 4 078 branches and agents, up from 3 046 in the previous year.
The increase in the branch network was driven by the growing number of microfinance institutions and the expansion of agent networks, as institutions sought to enhance outreach and access to financial services.
During the year under review, female clients accessed loans amounting to ZiG2,27 billion, representing 31,57 percent of the total loan portfolio of ZiG7,19 billion.
The proportion of female borrowers stood at 43,37 percent of the industry’s total borrowers of 422 358, reflecting an increase from 28,68 percent recorded as at 31 December 2024.
In 2025, the microfinance sector recorded aggregate net profit of ZiG859 million compared to ZiG971,68 million recorded in December 2024.
The decline in net profit was due to high operational costs as represented by a decline in the operational self-sufficiency ratio from 182,81 per cent as at 31 December 2024 to 163,5 per cent as at 31 December last year.