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Banking Act of Malawi

Summary

The Banking Act of Malawi (Cap. 44:05) establishes the regulatory framework for banking in Malawi. The Act sets out the requirements for licensing, supervision, and regulation of banks, as well as the obligations of banks to maintain adequate capital, submit periodic returns, and comply with accounting policies.

Key Provisions

Licensing Requirements

• Section 5 requires that applicants for a banking license demonstrate:
  • A valid business purpose
  • Sufficient capital
  • Expertise

Capital Requirements

• Every bank must maintain adequate capital (section 10)

Accounting Policies

• The Registrar may issue directives on accounting policies, including:
  • Valuation of assets and liabilities (section 11)
• Banks must comply with these directives

Cash Dividends

• Banks cannot declare cash dividends if it would result in a breach of capital adequacy requirements (section 12)

Periodic Returns

• Banks must submit periodic returns to the Registrar, which may include:
  • Financial statements
  • Other information (section 13)

Conclusion

The Banking Act of Malawi provides a comprehensive framework for regulating banks and ensuring their stability and soundness. The Act’s provisions are designed to protect depositors’ interests and maintain public confidence in the banking system.

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