Banking sector loans and advances to individuals amounted to 15% in 2011 indicating a huge appetite for loans despite the liquidity crunch.

Loans to the agriculture sector amounted to (16%), manufacturing (18%), communication (16%), services (15%) mining 6,4% and distribution (17%).

Presenting his Monetary Policy on Tuesday, central bank governor Gideon Gono however said despite high lending rates charged by banks, savings and demand deposits, which constitute the bulk of the deposits, continue to attract low interest rates and high transaction charges.

“This negative development continues to militate against efforts geared at promoting a savings culture among the banking public,” said Gono.

“In turn this compounds the country’s liquidity situation which also hamstrings the economic recovery process.

“Consistent with the transitory nature of deposits coupled with the attendant liquidity challenges, banking sector credit has also largely been short-term in nature.”

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He said in concordance with the expansion in the country’s deposit base, total credit to the private sector grew from $1,563 billion in November 2010 to $2,8 billion in November 2011.

“This development though promotive of private sector-led growth still falls short of credit required to support fast-paced economic growth that meaningfully creates jobs and uplifts the general standards of living for the generality of Zimbabweans,” Gono said.

Deposits held by banks as at November 30, 2011 were $3,2 billion while year-on-year growth in deposits declined to 50% in November 2011 from 80% September 2010.

Gono said against the background of expanded credit and growth in the deposit base, the loan-to-deposit ratio increased to over 71,7% by end of December 2011 from 61,9% in December 2010.

He however said if offshore lines of credit are included the loan-to-deposit ratio for December 2011 could have exceeded 87%.