Interest rates must be controlled—RBM
The Reserve Bank of Malawi (RBM) has said there is need to control current exorbitant commercial bank interest rates to ensure affordability of cost of finance.
Recently, commercial bank interest rates rose to over 40 percent partly due to government heavy borrowing, an illiquid money market and a high RBM base lending rate which has been maintained at 25 percent since December 2012.
But speaking in an interview on Monday on the sidelines of the official opening of NBS Bank Limbe Service Centre, RBM director of bank supervision Eldin Mlelemba said the current cost of finance needed to be controlled.
Said Mlelemba: “To make sure that the cost of finance comes down, the bank is working tirelessly on that because it is important that finance is affordable by the majority of the people. First, we are reviewing the laws so that [RBM] has powers to control interest rates. We are reviewing our laws to ensure that some of the things are in there. When that is done we are sure that interest rates will come down.
“Banks are supposed to comply with Basel II requirements by January 2014. Basel II is one way of measures to ensure that banks are operating in a safe and sound manner. Through implementation of Basel II, we are setting standards through which banks are required to have adequate capital at the same good risk management systems. When commercial banks have these in place you can be sure that they will be strong and will continue serving their customers.”
He added that the new Service Centre is a welcome development because it means that it is committed to providing quality services to its customers.
Mlelemba noted that less that 20 percent of adults in Malawi have access to financial services and RBM has put in place measures to ensure an improvement.
He noted that commercial banks are now allowed to use electronic banking services through use of computers. He also cited that commercial banks are using mobile and telephone banking to spread their reach to customers adding that soon customers will be able to be able to apply for loans through phones.
Speaking during the official launch of the service centre, NBS Bank chief executive officer Bernadette Mandoloma said the opening of the new service centre was testimony that the bank was committed to customer service.
“We believe that customer is king and that he must be served at a place where it is conducive to doing business. We believe that our customers will be in a more spacious place. NBS Bank numbers have grown since seven years ago to over 300 000. Reduction of cost of finance is determined by a number of factors, some which are determined by broader economic fundamentals,” said Mandoloma.
The new spacious NBS Limbe Service Centre opened its doors on Monday March 22 and is one of the 38 centres across the country. The centre has two ATMs, bringing the total number of EazyBank ATMs in Blantyre alone to 12 and 80 across the country.
