Reserve Bank of Malawi imposes punitive penalties to banks

The Reserve Bank of Malawi (RBM) has come up with punitive administrative penalties targeting financial institutions which, among others, will see commercial banks paying up to fifty million Kwacha for contravening the Financial Services Act.

Chuka: Reserve Bank  of Malawi Governor

Chuka: Reserve Bank of Malawi Governor

RBM through Registrar of Financial Institutions is expected to start enforcing the charges and penalties by 1st October, 2015 with main focus of ensuring that  financial institutions especially banks are complying with  the provisions of the Financial Services Act and the directives of the Central Bank.

According to the schedule of charges and penalties which Nyasa Times has a copy, banks are expected to pay between K25 million and K40 million on offences related to failure to submit information, K40 million for large exposure and credit concentration limits related offences and between K30 million and K40 million on offences related to transactions banks have with related parties.

For instance, commercial banks are expected to pay a K40 million penalty where a bank’s exposure to an insider or related party exceeds 10 percent of core capital, and K30 million where a credit facility to an insider or related party is not secured by collateral which is enforceable.

The banks are expected to part with K40 million in situations where they happen to grant a credit facility to an insider or a related party while another credit facility to that person is non-performing.

RBM has also imposed punitive penalties on banks whose directors or senior management officials own shares directly or indirectly in a credit and on banks whose directors or senior management official serve on the board of a credit reference bureau.

And the banks are also expected to pay K40 million for having a politically exposed person serving as director or senior management official without Registrar of Financial Institutions’ approval.

The Central Banks has also taken into consideration the conduct of commercial banks which
have not cooperated with the country’s Credit Reference Bureaus (CRBs).

According to the schedule of the charges and punitive administrative penalties, commercial banks will be paying K25 million for failing to submit information including material changes on credit history of the bank’s borrowers and customers to a Credit Reference Bureaus.

There has been a complaint by CRBs that most banks were reluctant to cooperate in submitting information despite the enactment of Credit Reference Bureaus Act in 2010.

Meanwhile, government has issued an order demanding all its agencies to start cooperating with the country’s credit reference bureau by providing them with information to help them in the mobilization of data for their credit reference services.

According to a directive from the Office of the President and Cabinet (OPC), all local councils and government entities should start cooperating with Credit Reference Bureaus (CRBs) in the country.

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21 thoughts on “Reserve Bank of Malawi imposes punitive penalties to banks”



  2. concerned tax payer says:

    This Bank has failed in its regulatory function as we saw with cash gate withdrawals from account #1 and commercial banks. It failed in its supervision role as we saw with Malawi Savings Bank. RBM has also failed in stimulating the economy through pragmatic monetary policy. Interest rates are high which is killing investment. Useless bank run by clueless people!!!

  3. Suzgo Longwe says:

    Good move arrest everyone who is involved

  4. ENOCH says:

    Nkhani yofunika ndi interest rate osakhala matokoso mukunenawo

  5. Amati kupota zingwe mbuzi zitatha

  6. ALOSWEA says:

    Top bosses in banks are involved no matter what?how can someone cash large sums of money at 2pm and collect them at 7pm kkkk check in there CCTV ,please hire A Zungu to be Bank Top Boss this can not happen,but with these Monkeys Malawi satukuka sheeee connection of momkeys ,she Monkeys kaye a chuluka wodwala Aids Bank angoti kaya tafakale ife kkkkk

  7. ngerengere says:

    Banks played Avery great role in cashgate but they left like ssacred sheeps

  8. nthawi says:

    The customer with little money in the bank will suffer for this ..not even the targeted people who can cause problems to the bank. Malawi ameneyo

  9. Kamuzu Banda says:

    We need RBM to work on punitive interest rates

  10. Therere says:

    good move though late

  11. Mzee says:

    No bank was guilty of an offence during cashgate. There is no law that says i cant withdraw 100 million per day as long as everything is okay. Cashgate cheques were genuine and machine generated and also Accountant General confirmed the aunthenticity of the cheques. Why did MG decide that no cheque should bounce? Dont blame banks blame Jozephe Mwawamveka. This guy is smart he opened the system benefitted and voila he is minister.

  12. bottomani says:

    Better late than this case may be too late. The cashgate hotse os already out of the stable. These measures should have been out in place decades ago. But we are a failed state. We do everything backwards. And the rest of the world moves forward. Retrogressive.

  13. enala chipandwe says:

    the same Chuka and RBM and commercial banks who efficiently presided over cashgate? Is Malawi a drama group now? So we now even have poverty of shame in Malawi?

  14. chimwemwe says:

    rbm should put there attention in limitting the kwacha depreciation they have lost track we need new ideas and blood

  15. belekiya says:

    I would wish that the Reserve Bank should also enforce penalty for employers who do not follow provisions of the Pension Act. I have a friend who works with one of the famous Hotels in Lilongwe who informed me that their employer told them that if they want pension they can go and work with employers who provide pension.

  16. Kandapako says:

    Malawi is good at formulating regulations and resultant consequences but extremely useless at implementing.

  17. .............. says:

    We are also waiting for the punitive measures on banks involved in facilitating cashgate including the RBM itself.

  18. Jendayekha says:

    “RBM has come up with punitive administrative penalties” my foot! Where was this RBM when Bingu, JB, Mulli, APM, PSs, Junior Civil Servants etc were busy looting billions of tax payers money? Where on this planet can individuals withdraw hard cash without raising suspicion to the system. All this looting was a Mlakho wa Alomwe plan to destroy the economy using tribesmen put in all strategic financial positions from Treasury, RBM Commercial banks etc. Who is fooling who, the net is closing in for these thugs in DPP.

  19. chatonda says:

    Mr Chuka, what benefit does this have in solving the country’s ailing eceonomy? Why cant you just issue a circular to those concerned/ You have a daunting task ahead and that is to help solve the financil situation in the country and not we are seeing here. Where are the dollars that Peter said we have the highest import cover than ever before/ Why os the Kwacha losing grip like a skyrocket? Are you aware of your roles or you are there by Joyce Banda and you still think about your cashgate involvement?

  20. i miss kamuzu says:

    what about bank managers that were approving cashgate transactions of millions of kwacha in hard cash, in a single day, to a single person, without question? will they be fined, fired or arrested? i’m just asking

  21. i jabu says:

    i dont trust this man just like mbendera

Comments are closed.