CENTRAL bank chief, Gideon Gono warned Friday the country's fragile economy could grind to a halt if the government rushes its planned seizure of majority stakes in foreign-owned banks.

"The implementation of indigenisation and economic empowerment regulations in the banking sector should be done in a manner that preserves confidence since any adverse developments in the banking sector could grind economic activity to a screeching halt," Gideon Gono said.

He was speaking to business executives at the annual congress of the Confederation of Zimbabwe Industries in the eastern resort town of Nyanga.

The law has forced mining firms, including the country's biggest platinum mine Zimplats, a subsidiary of South Africa's Impala Platinum, to submit schedules on how they will surrender a majority share.

"We are gratified to note that some aspects of the indigenisation and economic empowerment regulations are receiving attention with a view to harmonize and fine-tune pertinent issues," Gono said.

“Within this context, the need to reconcile the Indigenization regulations and other Acts of Parliament cannot be over-emphasized.

“Accordingly, the implementation of the Indigenization and Economic Empowerment provisions cannot be done in isolation of the Banking Act and Regulations, the Reserve Bank of Zimbabwe Act, the Exchange Control Act and Regulations, the Companies Act and all other already existing legal instruments.”

Indigenisation Minister Saviour Kasukuwere, in a government notice made public earlier this month, gave foreign banks and other companies one year to cede a 51 percent stake to locals, as required under current laws.

Mugabe's partner in a coalition government, Prime Minister Morgan Tsvangirai dismissed the ultimatum on the banks as illegal and a threat to the ailing economy's recovery prospects.

Britain's Standard Chartered Bank and Barclays Bank are among the major foreign banks with operations in this former British colony.