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Standard Bank rate cut effective today

Standard Bank says the revised base lending rate, which stands at 32 percent and not 36 percent as reported on Friday, takes effect today.

The bank, which slashed its lending rate following a cut in Liquidity Reserve Requirement (LRR) ratio to 7.5 percent by Reserve Bank of Malawi (RBM) on Tuesday, said other rates affected by the base lending rate movement have since been shared with the public through the media and will be posted in its respective branches nationwide.

Mashanda: The rate stands at 32 percent
Mashanda: The rate stands at 32 percent

RBM resolved to reduce LLR ratio from 15.5 percent to 7.5 percent at its third Monetary Policy Committee (MPC) meeting in Lilongwe on Tuesday to “enable [commercial] banks to lower the spread between prime lending rate and the policy rate” which is at 25 percent.

LRR ratio is the portion of deposits, expressed as a percent, that commercial banks keep at the central bank as reserves without interest. This means that at 7.5 percent, every commercial bank now has an obligation to deposit K7.50 out of every K100 at RBM and hold in its banking hall K92.50 for every K100 deposited by customers.

Standard Bank Malawi chief executive officer Andrew Mashanda told The Nation yesterday that the bank decided to take the lead in effecting the downward revision of the lending rate to extend the benefit to its borrowing customers.

Said Mashanda: “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 prioritised the needs of its customers who require to borrow for investment.”

He 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.

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