Banks, SMEs positive on new bank rate

Bankers Association of Malawi (BAM) says it will continue to respond positively to developments in the banking sector as it is keen to see customers access funds at an affordable rate from banks to grow their businesses.

BAM president Bernadette Mandoloma said this in reaction to the recent bank rate cut by two percentage points to 22 percent from 24 percent, a decision by the central bank through Monetary Policy Committee (MPC) in view of the disinflation process in the recent past and inflation outlook.

Mandoloma said the association has been expecting the downward revision of the bank rate in view of the continued positive inflation trend.

“What this means to our customers is that the cost of borrowing will correspond, thereby reducing the burden of servicing loans,” she said.
Mandoloma said it is the association’s anticipation that inflation rates will continue to ease, observing that with low interest rates, the cost of capital becomes more affordable.

“As BAM, we hope the trend continues for the good of our customers. The continued reduction in inflation will equally have a positive impact on our customers. We are positive this will in turn positively impact the common man on the street,” she said.

On his part, Small and Medium Enterprises Association (Smea) President James Chiutsi said the move would help stimulate SME growth if more banks revise the rates downwards.
“Access to bank finance for SMEs from banks has been an issue for some time. We fail to borrow from because the rates are very prohibitive. Though the cut is not much, it will mean something for us SMEs.

“Presently we have seen that some banks have started reducing the lending rates and it is our hope that other banks will do the same,” he said.
Meanwhile, National Bank of Malawi (NBM) and Standard Bank have slashed their base lending rates to 30.5 percent and 30 percent respectively.