National Bank of Malawi (NBM) yesterday became the first commercial bank to react to the Reserve Bank of Malawi (NBM) bank rate cut when it lowered its base lending rate from 32 percent to 30.5 percent.
NBM, the country’s biggest bank by assets, also gave depositors relief as it maintained prevailing deposit rates before the recent review of the bank rate—the rate at which commercial banks borrow money from RBM as lender of last resort.
Traditionally, commercial banks in the country adjust deposit and lending rates in tandem such that when the lending rate is slashed, deposit rates are also trimmed. Likewise, every time lending rates are raised, deposit rates also go up.
In an interview yesterday, NBM head of strategy and marketing Wilkins Mijiga said the bank maintained the deposit rates to encourage customers to borrow and stimulate economic activities.
He said: “We have maintained the rate paid to depositors while passing on the price [base lending rate] of money to our borrowers to ensure that we encourage businesses and households to invest and grow the economy.”
NBM’s decision follows the cut on Friday in the benchmark bank rate by RBM’s Monetary Policy Committee (MPC) from 24 percent to 22 percent, a move hailed by economists as good for the investing public.