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Domino Effect Seen in Bank's Collapse As Liquidity Crunch Continues

Economic commentators say the cancellation of AfrAsia Bank’s license clearly shows how vulnerable the banking sector remains due to sustained liquidity challenges.

AfrAsia had its license revoked on Tuesday after failing to meet the minimum capital benchmark of $25 million set by the Reserve Bank of Zimbabwe (RBZ).

The bank becomes the second to fall by the wayside in less than two months after Allied Bank, which shut down in December for the same reasons.

The instability in the banking sector has many people on edge, and some policy makers are now proffering remedial measures.

Opposition MDC Senator Dorothy Tholakele Khumalo is proposing a government bailout for the sector and struggling businesses.

But her proposal could merely be a matter of record, given the government is literally bankrupt and battling to make ends meet.

Economic analyst Rejoice Ngwenya said a domino effect seems to be taking root and threatening more banks.