Ecobank Malawi accused of victimising clients: Civil servants cry foul on loan agreement

Government employees who have accessed a Civil Servants (Government) Loan Facility through ECOBANK Malawi have complained of being victimized by the bank’s delays to promptly remit refunds after being deducted as per the loan agreement.

The Government Loan Agreement with six banks in Malawi—initially with FDH Bank, Standard Bank, Malawi Savings Bank, New Building Society, National Bank of Malawi and Ecobank—stipulated an initial 17 percent interest before the Kwacha currency was devalued last year and interest rates skylocketed,  with 10 percent to be paid by the borrower while 7 percent to be cushioned by the Government.

However, with the base bank lening rates hitting the roof at 36 percent and with interests rates hovering around 25 percent, deductions on loan repayment has risen with the devaluation of the Kwacha Currency at 49 percent in June 2012 while inflation has hit 33 percent according to National Statistical Office.

This means that the deductions on the past and present loans have increased owing to the aforementioned macroeconomic fundamentals, making borrowing and saving a nightmare in the country.

Some of the customers of the bank who took these loans with the bank complained to Nyasa  Times that ECOBANK is not remmitting the refunds to them as per loan agreement.

The customers said as per agreement, ECOBANK was supposed to be remitting the money it deducts form the customers as soon as Government has honoured them with the cheque that custions all borrowers under the scheme.

“What is happening is that instead of the bank only getting 10 percent so that the remaining percentage is taken from Government it is combining both deductions. Some of us are paying over K50, 000 a month instead of of paying about K30, 000 every month,” said a customer who asked for annonymity.

“Our expectation, in the case of ECOBANK, was that after every quarter the bank would remit the money to us after Government, through the Accountant General’s Office has honoured them but this is not happening,” said the customer, just outside the bank’s office in Lilongwe on Monday.

in a telephone interview, an official at the Accountant General’s office in Lilongwe who got his loan through Malawi Savings Bank (MSB) said they have been getting their refunds from the MSB, the latest being in December 2012 when they got refunds for three months.

A teacher from Lilongwe who got his loan through Standard Bank said the bank only deducts the 10 percent and gets the remaining percentage from the Government and not from the borrower (customer).

“We are okay at Standard Bank because the bank only dedducts us 10 percent, the rest is dealt between the bank and the Government; we are not concerned. As such, we don’t get the refunds because of this arrangement, which is very fine, Standard Bank is a better and caring bank,” said the teacher.

 

A civil servant Mike Chipalasa, who is customer of ECOBANK, said he got his loan in October 2011 but has never received any refunds from ECOBANK.

“I am deducted about huge sums of money every month for a very smal loan facility, very small loan. The bank has never refunded any money to me sicne 2011 and I don’t know what to do next,” said Chipalasa.

Asked to whether he approached the bank to find out what was wrong, he said:

“I have done this several times both in person and through emails to the bank officials but nothing is happening, I am not being assisted. Because of this, the bank owes me a lot of money which it is failing to honour and I am angry.”

Ecobank’s chief executive officer was recently in the country  and met finance minister Dr Ken Lipenga.  According to media reports, the Ecobank CEO said his bank will continue business in the country despite the fact that the bank posted losses in the first half of 2012 and is yet to release a financial position for the whole year 2012.

The Civil Servants Loan facility has helped many civil servants in Malawi with most of them driving cars while others have built houses. It was an initiative by the fprmer DPP-led Government to help civil servants live a better life.

Ecobank is a pan-African bank with a presence in 32 countries in Africa and is considered by many investors as a gateway to the African financial market offering world class products and services.

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