Banks speak on covid-19 cushion

Institute of Bankers in Malawi (IOB) says while banks support governments’ efforts to cushion the financial impact of Covid-19, customers of some banks are free to seek the relief measures by restructuring their loans.

IOB’s sentiments follow President Peter Mutharika’s orders and measures announced on Saturday meant to protect jobs and incomes as well as protect businesses and ensure survival of the economy.

IOB chief executive officer Lyness Nkungula said banks will recover the cost once the moratorium is over, resulting in higher equated monthly installment or increasing the tenure if the person cannot afford higher equated monthly installment.

“We encourage those customers that are in distress now or will be after the moratorium to approach the banks for restructuring of their facilities. The moratorium is a win- win situation as we want the banks to survive as well through this troublesome period,” she said.

But on reducing fees and charges on electronic money transactions, Nkungula said there are a number of factors to be considered.

Commenting on the development, Consumers Association of Malawi executive director John Kapito said it is pleasing that banks are willing and have responded positively to the measures.

He said:  “We, however, call for a multi sectoral approach to handle this intervention where consumers and the banks are involved and able to agree on how such efforts can be implemented.

“The consumer, who we see as the weakest partner in this arrangement, must be given more information which must be independent and that such arrangement must not only benefit the banks.”

Malawi Confederation of Chambers of Commerce and Industry chief executive officer Chancellor Kaferapanjira said the chamber expects commercial banks to implement the measures smoothly to benefit the real sector.

In his address on additional Covid-19 measures on Saturday,  Mutharka instructed commercial banks and micro-finance institutions to observe a three-month moratorium on interest and principal repayments for all loans contracted by micro, small and medium enterprises.

Under this arrangement, Mutharika said the registrar will encourage commercial banks to restructure loans to this sector in order to extend their repayment by more than a year.

Mutharika also ordered a reduction on fees and charges on all electronic money transactions in order to promote their use.