Supervisory Levy for Banks Regulations 2025

GoVERNMENT NOTICE NO. 17 FINANCIAL SERVICES ACT (CAP. 44:05) FINANCIAL SERVICES (SUPERVISORY LEVY FOR BANKS) REGULATIONS, IN EXERCISE of the powers conferred under section 13 of the Financial Services Act., I. SIMPLEX CHITHYOLA, Minister of Finance and Economic Affairs, on the recommendation of the Registrar, make the following Regulations Citation Objectives 2025 Supervisory levy

1. These Regulations may be cited as the Financial Services (Supervisory Levy for Banks) Regulations, 2025. 2.(1) The objectives of these Regulations shall be to- (a) ensure that banks contribute towards the costs incurred by the Registrar in discharging his supervisory functions; and (6) strengthen and enhance a sound regulatory governance framework that will promote financial sector stability and soundness. (2) For purposes of this regulation, regulatory governance" means the capacity to manage resources efficiently and to formulate, implement, and enforce sound prudential policies and regulations within the premises of legal mandate and in accordance with internationally accepted supervisory standards. 3.1) A bank shall pay an annual supervisory levy comprising (a) a percentage of the bank's twelve months average risk-weighted assets of the preceding year; and (6) a surcharge based on the non-performing loans as at 31st December of the preceding year. (2) The twelve months average risk-weighted assets shall be calculated using a bank's monthly call reports as submitted to the Registrar. (3) A bank shall pay a supervisory levy of 0.04 percent of its twelve month average of risk-weighted assets, which shall be subject to (a) a minimum amount of K60.0 million; and (6) a maximum amount of 0.01 percent of the average industry risk weighted assets. (4) A bank shall pay a surcharge on non-performing loans as followS (a) a bank that has a non-performing loan ratio of below 5.0 percent shall not pay any surcharge;

14th March, 2025 (0) a vanK tnat nas a non-perrorming Ioan ratio or Derween 5.0 percent and less than 10.0 percent shall pay a surcharge of 0.10 percent; (c) a bank that has a non-performing loan ratio of between 10.0 percent and les than 15.0 percent shall pay a surcharge of 0. 15 percent; (d) a bank that has a non-performing loan ratio of between 15.0 percent and less than 20.0 percent shall pay a surcharge of 0.20 percent; and (e) bank that has a non-performing loan ratio of 20.0 percent and above shall pay a surcharge of 0.25 percent. (S) The supervisory levy payable in accordance with this provision shall be subject to value added tax. (6) A bank shall not pay supervisory levy until after eighteen months of commencing its operations. (7) The exemption in subregulation (6) shall not apply to new banks arising from mergers, amalgamations, acquisitions, conversions or similar transactions. (8) For purposes of this regulation, non-performing loan" has the same meaning as a non-perfoming credit, defined in the Financial Services Financial Asset Classification for Banks) Directive. (2) When collecting the supervisory levy referred to under subregulation (1), the Registrar shall 4.I) The supervisory levy shall be payable to the Registrar, within Payment of four months after the end of each yea. (a) debit the supervisory levy from the main account of the bank maintained at the Reserve Bank of Malawi; and (b) notify the bank, in writing, prior to debiting the account. (2) The penalty interest in subregulation (1) shall be applicable on the amount of the supervisory levy due from a bank based on the ruling policy rate for each day of default. 5.-(1) Where a bank fails to pay the supervisory levy within the period Penalty stipulated under regulation 4(1), the Registrar shall impose a penalty interest interest on the bank. 6. The Registrar may, in addition to the penalty interest prescribed under regulation 5, impose administrative penalties, directions, and enforcement actions as provided for under the Act and the Banking Act. 7. All supervisory levies and penalties collected under these Regulations shall accrue for the benefit of the Registrar, in the discharge of supervisory functions under the Act. Dated this 4th day of March, 2025. GN, 35/2018 (FILE NO.: FIN/PFSPD/02/12) S. CHITHYOLA 117 supervisory levy Administrati ve penalties Cap. 44:01 8. The Financial Services (Supervisory Levy for Banks) Regulations Revocation GN. 34/2018 2018 are revoked. Ilee of supervisory levy and penalties Minister of Finance and Economic Affairs