COMMERCIAL BANKS LOWER LENDING RATES

Some commercial banks in the country have slightly lowered their base lending rates amid calls for concerted effort to minimise possible effects of Covid-19 to businesses and the economy.

The country’s seven commercial banks, MyBucks Banking Corporation, National Bank of Malawi, Standard Bank and NBS Bank announced restructuring of their base lending rates.

The applicable base lending rates for banking loans and overdrafts in the commercial banks have been revised downwards from 13.30 percent to 13.20 percent.

This comes following announcement of various measures by the Reserve Bank of Malawi (RBM) at the end of its Monetary Policy Committee (MPC) Meeting to compel commercial banks to reduce lending rates and boost cash flow of businesses and households.

RBM Governor, Dalitso Kabambe, announced a 125 basis points slash in Liquidity Reserve Requirement to 3.75 percent.

This saw the Central Bank instantly pumping K12 billion into the banking system.

Kabambe also announced a cut in the Lombard Rate—the rate at which commercial banks borrow from the central bank—by 50 percent to 0.2 percentage points above the Policy Rate.

The MPC, however, maintained the Policy Rate at 13.5 percent.

Kabambe said the decisions were deemed necessary to ease banking system liquidity constraints and incentivise commercial banks to adequately support the sectors that are hit by the Covid-19 pandemic.

Kabambe said the decision to maintain the Policy Rate was arrived to mitigate against potential upward risks from the pandemic while monitoring developments as they evolve and act as and when necessary.