Banking Act: Key Provisions

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The Banking Act is a vital legislation that regulates the banking industry in Malawi. The act ensures the stability and soundness of banks by providing for their licensing, supervision, and regulation.

Licensing Criteria

To obtain a license, a bank must demonstrate:

• Effective management by at least two executive officers
• Meet the minimum start-up capital requirements set by the Registrar

Suspension or Revocation of License

In cases where a banking license is suspended or revoked, the Registrar has the power to issue written directions for:

• Disposal of assets
• Entry into specific transactions

Register of Banks

The Registrar maintains a register of banks, which includes a separate part for each class of banking business. The register is published in the Gazette annually.

Prudential Supervision

The act emphasizes prudential supervision to ensure that banks:

• Maintain adequate capital
• Comply with accounting policies set by the Registrar
• Restrict cash dividends to prevent breach of capital adequacy requirements

Submission of Periodic Returns

Banks are required to submit periodic returns to the Registrar, which includes information on their operations in Malawi and those of their:

• Subsidiaries
• Affiliates
• Associates
• Holding companies

Failure to comply with these requirements can result in administrative penalties.

Supervision of Banks and Financial Institutions

The Registrar may periodically examine banks to determine their soundness and compliance with relevant laws. This supervision extends to affiliated companies and persons who control banks.

These provisions aim to promote the stability and integrity of the banking system in Malawi, ensuring the protection of depositors’ funds and maintaining public confidence in the industry.