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Banking Act of Malawi: Key Provisions

Licensing Requirements

• Only bodies corporate can be licensed as banks.
• The Registrar may determine other entities accepting funds from the public are engaged in banking business and require them to be licensed.
• A person who contravenes this section commits an offence and is liable to a fine of K10,000,000 and four years imprisonment.

Conditions for Licensing

• Factors Considered by the Registrar
  • Validity and accuracy of information
  • Capital adequacy requirements
  • Accounting policies and procedures
  • Compliance with the Financial Services Act
  • Suitability of directors and officers

Prudential Supervision

• Banks must maintain adequate capital for conducting their business.
• The Registrar may prescribe higher ongoing capital requirements if risks are identified.
• Directives on Accounting Policies
  • Valuation of assets and liabilities
  • Depreciation of assets
  • Impairment of assets
  • Provision for contingent losses and litigation

Restrictions on Cash Dividends

• A bank cannot declare or pay cash dividends if it would result in a breach of capital adequacy requirements.
• Notwithstanding the Companies Act, a bank cannot increase its paid-up share capital out of revaluation reserves.

Submission of Periodic Returns

• Banks must submit periodic returns and information to the Registrar as required.
• The format and frequency of submissions are determined by the Registrar’s directives.

Supervision of Banks and Financial Institutions

• Examination of Banks
  • The Registrar may examine or cause to be examined a bank’s business to determine its soundness and compliance with the Act or other relevant Acts.
  • The Registrar may also carry out examinations on a consolidated basis for affiliates, associates, holding or subsidiary companies.