Regulatory Alerts2018-01-01
Transactions of Banks with Related Parties Directive 2018
Issued by the Registrar of Financial Institutions in Malawi, this directive mandates that all credit facilities and transactions between banks and their insiders or related parties must be conducted on an arm’s-length basis to prevent undue favoritism and protect capital adequacy. It imposes strict exposure limits capping individual exposures at ten percent and aggregate exposures at twenty-five percent of a bank’s core capital, while requiring board approval, independent monitoring, and comprehensive disclosure of conflicts of interest. The directive establishes monetary penalties of up to fifty million Kwacha for institutions and ten million for executives, alongside administrative enforcement powers, and formally revokes the previous 2012 related parties directive.