Reserve Bank of Malawi (RBM) has started soliciting input from the business community on its plans to introduce community banks.
Speaking at a consultation meeting on Thursday in Mzuzu with Malawi Confederation of the Chambers of Commerce and Industry (MCCCI) members, RBM chief examiner for policy integration sector Sopani Gondwe said the central bank is proposing to introduce community banks to serve the needs of people in different geographical locations.
He said the aim of introducing the banks is to enhance economic empowerment among local entrepreneurs and provide easy access to banking services.
Gondwe said the community banks will be restricted on deposit mobilisation and lending to their specific locations, among other regulations.
“These banks will be offering almost all services offered by mainstream commercial banks, except trust operations, investment banking and securities brokerage,” he said.
Gondwe, however, said debt financing will not be allowed as startup capital while they will follow mainstream banks’ winding up procedures.
He said this is an opportunity for local entrepreneurs to team up and demonstrate financial probity to own a bank that can serve their needs.
In an interview on the sidelines of the event, MCCCI head of real sector and macroeconomic policy Hope Chavula said the introduction of community banks is a welcome development, saying this will help in bringing an enabling environment in the banking sector.
In his presentation, Chavula said the current market set-up is not conducive for businesses mostly because of high interest rates offered by commercial banks which raises the cost of finance.
After the consultations, the next steps will be finalising the regulatory framework, seeking the board’s approval and publication in Gazette.
The application fee is pegged at K1 million.