Standard Bank Malawi launches Village Bank account, Khonde Savings: Comes with K200 000 Life Insurance cover

Standard Bank Plc has launched a new savings account called Khonde Savings aiming to secure the financial ambitions and needs of registered village banks.

The new account comes at a time when an official survey by the National Statistical Office (NSO) has singled out village banks as the main source of borrowing by households at 41 percent against other sources.

Khonde Savings Account comes with an option of a life insurance pay-out of K200,000 in the event of death or permanent disability for every village bank member with a maximum of 20 members.  The offer of life insurance is optional to registered village banks at a monthly premium of K8,000. The second option has a basic offering without life assurance and does not attract a monthly service fee.

Announcing the offer, Acting Head of Personal and Business Banking Charity Mughogho said the new account will allow village banks keep money and transact with convenience while also accessing digital banking services.

”The offer is part and parcel of the bank’s drive towards financial inclusion by ensuring that the unbanked population has access to banking. The bank’s digital platforms will also ensure that village savings groups and beneficiaries are able to transact digitally by receiving monthly contributions, paying out loans to each other, and share the accumulated returns of their savings at year end through members’ accounts that will also be opened as part of the partnership,” she said.

Mughogho said in line with Standard Bank’s current digitalization drive, access to the bank’s 247 platform and all online transactions within the bank for village banks will be offered for free. She added that the village savings group members will have an option of viewing transactions in the account using the digital channels that will be offered.

She said Khonde Savings account will greatly enhance accountability of village banks and their financial soundness as funds well be kept securely and only withdrawn at the behest of three appointed signatories.

“Since members contributions and repayments are currently collected through cash transactions in most of these groups, there are also issues of miscounting as well as targeted theft through collusion that are a common occurrence. There is also potential risk of money laundering and fraud since the members do not go through vigorous screening as they would if they were dealing with banks,” she said

Interest return will be paid on a monthly basis on both account options and will be calculated at the annual rate of 5% of the account balance at the end of each month.

The Khonde Savings Account is open to a wide range of village savings groups, be it self-mobilised or those who receive donor funding and technical support, and with an aspiration to graduate out of the poverty trap and become self-reliant.

Furthermore, it has capabilities of being integrated with Quickash, mobile wallet services such as Airtel Money and Mpamba as part of digitization and financial integration and inclusion.

In order to open the account, each village saving group will need to present a constitution governing the operations of the group, the minutes for the meeting where the group agreed to open an account with Standard Bank Plc, valid National Identity Cards and proof of residence of all signatories (minimum of 3). If the group opts for the insurance offering, National Identity Cards for all the group members will be required to be submitted in order to facilitate the arrangement of the insurance aspect of the offering.

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