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Public notice on real time gross settlement (RTGS) system
Gideon Gono
October 02, 2008

• It has come to the attention of the Reserve Bank that the RTGS platform has become an active vehicle for illicit foreign exchange parallel market dealings, as well as a convenient excuse by sellers of goods and services to overprice their commodities.
• The victims have largely remained the defenseless members of the Public who are having to watch in despair as their hard-earned incomes are grabbed away from them through the extractive pricing structures.
• Further analysis of these very disturbing trends has shown that some banking institutions are contributing to this ugly turn of events by unduly delaying the processing of RTGS payments instructions by their customers.
• The design of the RTGS system is, in fact, such that payments and inter-account transfers must reflect in the recipients' accounts a few minutes after effecting the payment.

Benefits of RTGS systems

• RTGS systems are by nature designed to handle high value, high-risk payments. They enable instant transfer of funds from one bank to another.
• When complemented with straight through processing (STP), they facilitate real-time end to end processing of payments between customers of different banks.
• A major advantage of RTGS systems is that they provide final and irrevocable settlement through accounts held at the Central Bank, thereby reducing credit risk.
• The abuse, which the RTGS system is being subjected to, therefore, negates the benefits highlighted above.
• It is thus, regrettable that a system that has provided a critical conduit in supporting economic activity is being deliberately tarnished to a point where its benefits are no longer appreciated by the very same stakeholders who, if there were no other ulterior motives, would stand to benefit more from it.
• Against this background therefore, the Reserve Bank of Zimbabwe wishes to advise that the use of the RTGS system for customer payments is hereby suspended until further notice.
• For the avoidance of doubt, there will be no processing of RTGS payments through the system with effect from Friday, 3 October 2008.
• However, cognizant of the need to provide liquidity to facilitate settlement of Clearing House obligations by financial institutions, all payments from Reserve Bank to financial institutions and vice versa will continue to be credited to their accounts electronically. These include funding by banks for cash withdrawals.
• All revenue payments from individuals and companies to ZIMRA, as well as payments destined for government accounts held at Reserve Bank, will also continue to be processed through the system.
• The Reserve Bank regrets any inconvenience caused to the transacting public in this regard.
• However, as the Central Bank, we have no option but to take this drastic measure in order to maintain sanity in the financial system.
• We are not killing the system that has served us well over the last six (6) years but merely responding to conditions that require decisive action.

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