Sunday, April 18, 2021
  • About Us
  • ImagiNATION
  • Adverts
  • Rate Card
  • Contact Us
The Nation Online
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Opinion
  • Sports
  • Chichewa
  • Enation
No Result
View All Result
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Opinion
  • Sports
  • Chichewa
  • Enation
No Result
View All Result
No Result
View All Result
Home Business Business News

Banks yet to react to policy rate cut

by Grace Phiri
10/11/2020
in Business News
3 min read
0
Share on FacebookShare on TwitterShare on WhatsAppShare on LinkedinLinkedinShare via Email

Bankers Association of Malawi (BAM) says commercial banks will react to the policy rate cut differently according to their internal business policies.

BAM chief executive officer Lyness Nkungula was reacting to a question on when the banks will pass on the benefits of the 150 basis points cut to policy rate from 13.5 percent to 12 percent announced by the Reserve Bank of Malawi (RBM) on Friday.

RelatedHeadlines

Covid-19 cash beneficiaries form savings groups

Banks speak on mortgage gaps

Mpico owed K10bn in rental arrears

Banks | The Nation Online

She said the policy rate cut will help to improve commercial banks’ capacity to lend.

Said Nkungula: “As you know, the balance sheets cannot remain the same in this period of coronavirus that has redefined many business models.

“By reducing interest rates, the central bank will help to spur business spending on capital goods, which also helps the economy’s long-term performance and can help spur household expenditures.”

On their part, economic commentators say the policy rate cut will help to reduce the cost of borrowing from commercial banks and help to stimulate economic activities.

But consumer rights activist John Kapito said in an interview yesterday that while banks take time to respond to policy rate cuts, the interest rate spread has remained wide despite the monetary authorities interventions.

He said money from the banks is expensive because of the wide spread, which hovers at around 15 percent.

Kapito, who is Consumers Association of Malawi executive director, said: “By reducing the policy rate, the benefits are supposed to accrue to banks, businesses and consumers. But we have noticed slow movement from commercial banks when the policy rate and the interest rate spread is still wide.

“People are failing to pay loans and borrow funds, because of the large spread. The banks are not being honest with consumers. We need intervention from the central bank on this.”

Since June 2019, RBM had maintained the policy rate at 13.5 percent from 14.5 percent in April 2019.

During the period, reference rate has averaged 13.3 percent while savings rate has average 4.2 percent.

However, commercial bank loans have been attracting interest rate in excess of 26 percent.

On annual basis, RBM figures show that private sector credit continued to expand in 2020, albeit more slowly since June 2020.

The figures further show that the annual growth rate of private sector credit edged up to 9.9 percent in August 2020 from 5.2 percent in the previous month, but remained lower than 18.8 percent in the corresponding period of 2019.

Month-on-month, private sector credit increased by 2.6 percent (K14.3 billion) to K573.5 billion in August 2020 compared to a contraction of 1.2 percent in July 2020.

Malawi Confederation of Chambers of Commerce and Industry director of buisness environment and policy advocacy Madalitso Kazembe hopes banks will respond to the reduction in policy rate as that would lead to a reduction in cost of borrowing.

Avatar
Grace Phiri
Previous Post

NBM unveils agriculture loan facility

Next Post

Scientists make strides in HIV prevention research

Related Posts

Nkolokoti women sharing profits from their savings and loans interests
Business News

Covid-19 cash beneficiaries form savings groups

April 17, 2021
BANKS | The Nation Online
Business News

Banks speak on mortgage gaps

April 17, 2021
Kafoteka: Situation is stifling our operations
Business News

Mpico owed K10bn in rental arrears

April 16, 2021
Next Post
Hosseinipour | The Nation Online

Scientists make strides in HIV prevention research

Opinions and Columns

People’s Tribunal

Cut the crap, act on abuse forthwith

April 17, 2021
Emily Mkamanga

No ransom for service delivery

April 17, 2021
Cut the Chaff

Tonse administration has bigger fish to fly

April 17, 2021
Off the Shelf

More fire on draining the swamp

April 17, 2021
https://www.mwnation.com/wp-content/uploads/2021/03/WFP-Afikepo-1-2.pdf https://www.mwnation.com/wp-content/uploads/2021/03/WFP-Afikepo-1-2.pdf https://www.mwnation.com/wp-content/uploads/2021/03/WFP-Afikepo-1-2.pdf

Trending Stories

  • Has over 25 cases to handle: Silungwe

    Chakwera, AG meet over MEC

    0 shares
    Share 0 Tweet 0
  • MPs in funds abuse go free

    0 shares
    Share 0 Tweet 0
  • Heartless plunder

    0 shares
    Share 0 Tweet 0
  • ACB out of MRA case

    0 shares
    Share 0 Tweet 0
  • Made See needs help—Namadingo

    0 shares
    Share 0 Tweet 0
  • Values
  • Our Philosophy
  • Editorial policy
  • Advertising Policy
  • Code of Conduct
  • Plagiarism disclaimer
  • Disclaimer
  • Privacy Policy
  • Terms of use

© 2021 Nation Publications Limited. All Rights Reserved.

No Result
View All Result
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Opinion
  • Sports
  • Chichewa
  • Enation

© 2020 Nation Publications Limited. All Rights Reserved.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.