The loans given to selected banks are for onward lending to struggling businesses.
NSSA’s intervention follows concerns that banks are over-charging businesses seeking loans for recapitalisation, forcing many of them to close down.
James Matiza, the NSSA general manager told bank executives at a meeting on Wednesday that the social security fund would lend banks money that would attract an interest rate of 10 percent.
“The banks could add on a profit margin of up to three percent and levy handling and other charges amounting to no more than two percent, resulting in an overall cost to the borrowing business equivalent to not more than 15 percent,” NSSA said in a statement on Thursday.
Matiza said at the end of September NSSA had US$180 million circulating among banks for onward lending to businesses.
But he said the fund was worried that the banks were charging exorbitant interest rates for the funds and adding extortionist handling charges.
“The worrying thing is that we are trying to help companies survive but if you lend the money to companies at a 40 percent or 60 percent interest rate, we are not helping the companies at all,” he said.
He cited the case of a company in which NSSA is a shareholder for which US$4 million was made available through one of the banks.
The bank took US$800 000 off this amount in handling fees and added a substantial rate of interest to the rate it was paying NSSA. In the end the company only had available US$2,7 million of the four million dollars that had been made available for it.
Matiza said companies were folding up because of their inability to repay bank loans.
Local companies have struggled to secure funding from local banks and they say the little loans they secure in most cases is supposed to be repaid in a very short space of time.
Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono, Wednesday said the central bank has approved US$1.5 billion this year in foreign lines of credit sourced by local banks.