Indebank Limited and NBS Bank have cut their interest rates in a move analysts have attributed to the improvement in liquidity levels, nose diving of Treasury Bills (T-bills) rates and an anticipated good tobacco marketing season.
The two banks have followed in the footsteps of MSE-listed National Bank of Malawi and Standard Bank Malawi which set the ball rolling by easing their borrowing rates last week to 35 percent and 36 percent respectively.
In published statements, Indebank has put its base lending rate at 37.5 percent whereas MSE-listed NBS Bank has pegged it at 36 percent, all down from above 40 percent.
The flurry of interest rates cut is good news to individuals and corporate because it means accessing loans at much more affordable rates than before and also flexibility in repaying loans already acquired.
Early this year, the country’s commercial banks raised their interest rates to above 40 percent, a move analysts attributed to the Reserve Bank of Malawi (RBM) Lombard facility pegged at 27 percent, two percentage points above the benchmark rate at 25 percent to assist authorised dealer banks to manage their liquidity squeeze.
T-bills rates have for the past few weeks been easing on all three tenors with last week’s RBM figures showing that rate for the 91 days tenor decreased to 16.46 percent from 17.99 percent, the 182 days rate slumping to 18.00 percent from 19.58 percent and the 364 days rate softened to 20.51 percent from 22.18 percent.
Liquidity levels have also improved, increasing from an average of K19.2 billion a day last week from a daily average of K17.8 billion the week before, according to RBM.
Chancellor College economics professor Ben Kaluwa said with the improvement in liquidity and the continued decreasing in T-bills rates, the banks have no choice but to cut the lending rate.
He said interest rates in Malawi are prohibitive.