Saturday, January 16, 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

Lenders against interest capping

by Suzgo Khunga
06/10/2018
in Business News, Front Page
3 min read
0
Share on FacebookShare on TwitterShare on WhatsAppShare on LinkedinLinkedinShare via Email

Lending institutions in the country have expressed reservations with the proposed Interest Rate Capping Bill which aims to cap commercial interest rates, saying the move might crimp lending by banks.

Parliament is carrying out consultations on the proposed bill after it adopted a motion last year that a Private Members Bill be drafted which would limit the rate at which lending institutions would recover loans.

RelatedHeadlines

Nocma in race against time

Banks reaping from high lending rates

Covid-19 mars cabinet review

Banks | The Nation Online

After consulting Blantyre-based banks and microfinance institutions last week, Parliament engaged Lilongwe microfinance institutions, among them, commercial banks and microloan organisations such as Vision Fund Malawi and Economics Association of Malawi (Ecama), among others.

While the policy lending rate is at 16 percent, banks and microfinance institutions charge about 23 percent base lending rate because they are at liberty to charge as they see fit.

But the proposed bill seeks to cap the interest rate applicable on the credit facility to a certain percentage above the prevailing policy rate for lenders and below the same policy for depositors.

Supporting the proposed law, Alexander Kusamba Dzonzi legislator for Dowa West said the lending system should benefit both the commercial banks and ordinary Malawians not as is the case where ordinary people are given a raw deal due to high-interest rates.

“It is evident that the deal of leaving commercial banks to decide interest rates has resulted into predatory interest rates charged on the citizenry. It must, therefore, be imperative that Malawi comes up with laws to cap the commercial lending rates,” he said.

But Microloan Foundation executive director and board chairperson Microfinance Association of Malawi Network (Mamn) Corrie Mulder cautioned that financial access and credit growth would adversely be affected.

He said the Mamn members have taken on initiatives to educate and mentor individuals and groups who seek loans on formulating business plans so they are able to pay back the loans.

“We need to be careful when we institute this, issues of sustainability of the microfinance institutions must also be taken into account. A lot of Malawians will lose access to finance if companies that cater to them cannot survive. We are not here to rob people, there are no big profits to be made and do not consider us as predators,” Mulder said.

Vision Fund chief executive officer Chilala Hakooma said championing financial inclusion did not come cheap and whatever charges are levied on loans are reflective of the service they provide to people.

Hakooma said the proposed legislation should consider that lending institutions are in different segments and microfinance institutions should not be put in the same category as commercial banks.

Hakooma also cautioned against using example in the region such as Kenya and Zambia who capped interest rates but crowded out private sector development.

Ecama executive director Maleka Thula said interest rate capping was not the solution and Malawi’s economy could not be compared to others within the region.

“If we were to cap, banks with high operation costs would go under or fail. It has not worked in Kenya for the simple reason that it did not enhance private sector borrowing but shrank it because banks opted to lend to the government instead,” Thula said.

He added that Reserve Bank of Malawi (RBM) should investigate if indeed the pricing of financial products is exorbitant and outline relevant risks that come with lending to different borrowers.

Previous Post

My warning to MCP and UTM

Next Post

Walter had CAF boss’ backing

Related Posts

Kambala: The board must make a decision
National News

Nocma in race against time

January 16, 2021
graph 4 | The Nation Online
Business News

Banks reaping from high lending rates

January 16, 2021
Chakwera: No comment
National News

Covid-19 mars cabinet review

January 15, 2021
Next Post
Nyamilandu: It will make sense if less developed countries are considered

Walter had CAF boss’ backing

Trending Stories

  • Chakwera: No comment

    Covid-19 mars cabinet review

    0 shares
    Share 0 Tweet 0
  • Locked with hubby’s brother

    0 shares
    Share 0 Tweet 0
  • Tonse owes ‘ife tonse’ an apology

    0 shares
    Share 0 Tweet 0
  • Nocma in race against time

    0 shares
    Share 0 Tweet 0
  • Unscrupulous traders dupe unsuspecting farmers

    0 shares
    Share 0 Tweet 0

Opinions and Columns

Bottom Up

For 20 Pounds John Chilembwe was betrayed

January 16, 2021
My Diary

Tonse owes ‘ife tonse’ an apology

January 16, 2021
Off the Shelf

Accomplices in genocide

January 16, 2021
Back Bencher

On verge of collapse due to Covid-19

January 16, 2021
  • 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.

WhatsApp us

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