Standard Bank of Malawi cuts interest rates to 32%

Standard Bank has become the first bank in Malawi to reduce interest rates to 32% from 38% in a move Chief Executive Officer Andrew Mashanda says aims at giving the bank’s customers opportunity to obtain affordable loans for reinvestment.

Standard Bank CEO Andrew Mashanda: Bank rate cut
Standard Bank CEO Andrew Mashanda: Bank rate cut
Malawi Kwacha
Malawi Kwacha

Mashanda said in a statement on Friday the bank’s new base lending rate of 32 percent takes effect on Monday August 3 and follows the Monetary Policy Committee’s decision to cut Liquidity Reserve Ratio (LRR) by half to 7.5%.

“Our decision to revise the base lending rate is in response to the Reserve Bank of Malawi’s latest directive to reduce the Liquidity Reserve Ratio (LRR) from 15.5% to 7.5%.

“The reduction in LRR has in turn reduced the opportunity cost of holding liquidity with the central bank, and in turn we have decided to pass the benefit back to our customers and the market. In reducing the base lending rate, Standard Bank has prioritized the needs of its customers who require to borrow for investment,” he said.

LRR is the mandatory portion of commercial bank’s deposits with the central bank expressed as a percentage.

Mashanda said the bank will continue to monitor economic fundamentals so as to take an appropriate position in the interest of its customers and the investing community.

Due to a donor aid freeze coupled with decline in growth (GDP) as a result of low agricultural production caused by floods, Malawi faces a liquidity crunch.

As a result banks have been marking the cost of their money, including forex upwards so as to remain financially sound while maintaining profitability. But the cut in LRR means that the banks have a lot of idle cash which must move out into the market at a cost.

It remains to be seen how the authorities will contend with non-food inflation following the latest adjustment in LRR. Inflation has been rising in recent months.

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chimwemwe
chimwemwe
5 years ago

why are you revising your forex rates upwards everyday have mercy on poor malawians standard bank dealers

zeze
zeze
5 years ago

kkkkk, Malawi, a home of loan sharks.

Concerned citizen
Concerned citizen
5 years ago

We have to appreciate the fact that the banks have to price in our high loan repayment default rate. This is another factor that makes borrowing more expensive in Malawi.

Concerned citizen
Concerned citizen
5 years ago

Thank you for the breathing space.

captain
captain
5 years ago

32% before commissions and bla bla it will reach 40% again. Am planning to invest outside my country though its painful coz u are playing us games

Chachacha
Chachacha
5 years ago

Pa Canada apa Reserve Bank’s rate is a mere 0.5% and the chartered bank’s is a mere 2%. Chalo ichi…

Patriot
Patriot
5 years ago

Not enough, bring it to 24%

kamphulusa
kamphulusa
5 years ago

32% is still too high considering that some countries are charging 5% or less

vyaya
vyaya
5 years ago

So 32% lending rate is low???? Kkkkkk this country is a joke with its banks

Dr. Nissiel Morgan
Dr. Nissiel Morgan
5 years ago

That is better and promising if aggresively proggresed. As of now Malawi remains prohibitive to invest, yet a shade of light is visible in the horizone if this development of slashing interest rate would continue.

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