Malawi: lending & credit regulation

Who regulates

• Reserve Bank of Malawi (Registrar of Financial Institutions)

  Primary supervisor issuing directives on credit risk, licensing, and prudential standards for banks and microfinance institutions.

  ^{[1][2][3][4][5][6][7][8][9][10][11]}

Core laws & rules

• Financial Services Act (2010)

  Establishes the binding framework for banks and SACCOs, covering large exposure limits, asset classification, and external borrowing requirements.

  ^{[2][5][9][10]}

• Microfinance Act (2010)

  Provides the comprehensive regulatory framework for microfinance services, mandating registration or licensing for all microfinance service providers.

  ^[4][11]

Licensing & registration

• Microfinance Institutions

  All microfinance service providers and institutions must obtain registration or a licence from the Registrar of Financial Institutions under the Microfinance Act 2010.

  ^[4][11]

• Banks and SACCOs

  Banks and Savings and Credit Cooperative Societies operate under the Financial Services Act 2010, subject to licensing and prudential directives issued by the Registrar.

  ^[2][5][9]

Restrictions & warnings

• Foreign currency lending is capped at 90% of preceding monthly average foreign currency balances and restricted primarily to forex-generating enterprises.

  ^[3][6]

• Individual credit concentrations for banks must remain within twenty-five percent limits, and microcredit agencies are capped at ten percent for insider loans.

  ^[2][4]

• SACCOs are limited in external borrowing to five or ten percent of total assets to ensure financial prudence.

  ^[10]

Direction of travel

• Regulators continue to enforce standardized asset classification and Basel II-aligned credit risk measurement frameworks to maintain capital adequacy and sound credit diversification.

  ^[1][5][8]

Sources

1. Credit Risk Guidelines 2024 · 2024-01-01
2. Financial Services (Large Exposures and Credit Concentration Limits for Banks) Directive, 2015 · 2019-01-24
3. Foreign Currency Lending Directive 2018 · 2018-01-01
4. Microcredit Agency Directive 2018 · 2018-01-01
5. Asset Classification Directive 2018 · 2018-01-01
6. Foreign Currency Lending Ratio Directive 2018 · 2018-01-01
7. Asset Classification Requirements for Microfinance Institutions Directive 2014 · 2014-01-01
8. Credit Risk Guidelines · 2013-05-09
9. Financial Services Asset Classification Requirements for Savings and Credit Cooperative Societies Directive, 2013 · 2011-10-16
10. Financial Services External Borrowing Requirements for Savings and Credit Cooperative Societies Directive, 2013 · 2011-10-16
11. Microfinance Act 2010 · 2010-01-01