The Government has set new rules on bank ownership, triggered by instances of malpractice in the financial sector in the past few years. In the new rules to be included in the amendments to the banking laws, individuals and companies would be allowed to hold shareholding of up to 5 percent and 25 percent respectively, down from 25 percent and 40 percent.
The rules also extend to applications for bank loans by individuals in which they are shareholders or directors.
Finance Minister Tendai Biti told journalists last Friday that a raft of major changes has been proposed in the amendments to the banking laws, which seek to improve regulation and supervision of the financial sector.
"Individual ownership will be restricted to 5 percent. As a corporate you will be allowed to hold up to 25 percent," he said.
Zimbabwe has faced major crises in the banking sector due to abuse of depositor funds by individuals holding major influence in the institutions.
This year, the Reserve Bank of Zimbabwe shut down at least two commercial banks amid allegations of depositor fund abuse and high levels of non-performing insider loans.
Minister Biti said Cabinet had also agreed that individuals holding shares, as well as directors of the banks, would not be allowed to apply for loans from the same institutions they own or work for.
"When the shareholder borrows from another bank, it has to be secured lending," he said.
Meanwhile, Minister Biti said the changes would also see the establishment of the Office of the Ombudsman who would be responsible for monitoring interest rates. The current high interest rates in the market have been cited as another major impediment to the recovery of the economy's recovery.
Other changes would include the separation of banking regulation and supervision, which are currently the responsibilities of the central bank. Bank failures have been partially blamed on inability of the central bank to effectively monitor the sector.