The Reserve Bank of Malawi (RBM) has increased the minimum capital percentage for all the commercial banks in the country.
According to the National Bank of Malawi (NBM) economic newsletter, the minimum capital rate which was at K210 million (US$ 1.5 million) has been raised to K850 million (US$6.07 million), representing a 300 percent increase.
The increase comes as Malawi is trying to overcome effects of the current global financial crisis which is drastically penetrating through African financial sectors.
The RBM’s initiative for the increase has economic commentators in the country debating.
“The move will likely force smaller banks to collapse or go into mergers in an attempt to pull together resources to meet the requirements,” say some economic commentators that are expressing concern over the development.
On the other hand, others have given their applause for the initiative saying “it will help to bring sanity to the industry as it will ensure that only strong players operate in the sector.”
RBM has given an 18-month ultimatum to all the financial institutions that are finding it difficult following the initiative and they are supposed to comply with the new regulation or risk being shut down.
“Customers in banks should not be surprised to see subtle changes in the procedures and processes in the banking business as these new measures take root,” reads part of the NBM newsletter.
