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NON-PERFORMING LOANS INCREASE

By BUUMBA CHIMBULU

THE banking industry has continued to record Non-performing Loans above the prudential benchmark of 10 percent as Covid-19 impacts on the abilities of customers to effectively service their financial obligations.

The industry during the first quarter of this year closed with the NPLs ratio of total loans at 11.4 percent, which is above the prudential benchmark of 10.0 percent, says Bankers Association of Zambia (BAZ).

BAZ Public Relations Officer, Miriam Zimba, in a response to a press query indicated that the upsurge in the Covid-19 infection rate in the country had an impact on asset quality.

“The rate of default for credit facilities remains relatively high as the negative effects of the Covid-19 pandemic amidst slowed economic activity continues to constrain businesses’ and households’ income, thereby impacting on the ability of individuals to effectively service their financial obligations towards their credit facilities (loan servicing),” she said.

Meanwhile, Ms Zimba said commercial banks had continued to implore customers and members of the public to take advantage of the available self-service banking platforms.

She explained that these included as mobile, online, and other digital platforms such as ATMs (for both cash withdrawals and deposits), as well as Point of Sale (PoS) terminals for digital payments.

“Both the digital and mobile banking transaction channels for commercial banks are working very efficiently and we continue to urge members of the public to leverage on these channels, as a measure to reduce their risk of exposure and only visit branches when necessary,” Ms Zimba said.

Recently, BAZ Chairman, Herman Kasekende, indicated that business continuity protocols to ensure smooth operations of all digital channels had been put in place by commercial banks to guarantee their efficiency and working on a 24-hour basis, especially during the Covid-19 period.

Mr Kasekende said all the channels would remain open to ensure clients continue accessing essential financial services during this period.

He indicated commercial banks’ commitment in ensuring that self-service digital banking platform services continued to operate efficiently on a 24-hour basis.

“Our earnest appeal is that clients should transact from the safety of their home through digital channales (online and mobile banking) and only visit branches when absolutely necessary,” he said.

Mr Kasekende also stated that the quantity of oxygen as advised by the Ministry of Health would assist in reducing the acute shortage of oxygen in Lusaka Hospitals for at least three months.

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