Overview

Banking in Malawi dates back to the colonial era. As at independence in 1964, two foreign commercial banks, Standard Bank and Barclays Bank, dominated the banking industry. Other banking institutions which existed at the time were New Building Society, National Finance Company and Post Office Savings Bank (POSB). In 1969, Commercial Bank of Malawi was registered and started its operations in 1970. A year later in 1971, Standard Bank and Barclays Bank merged to form National Bank of Malawi (NBM).

In accordance with the Financial Services Act of 2010 and the Banking Act of 2010, the Registrar of Financial Institutions is entrusted with the responsibility of regulating and supervising the banking sector in Malawi. Operationalizing these key legislations, the Registrar issues directives, regulations, and guidelines that provide guidance for the supervision and regulation processes concerning entry control, ongoing supervision, and exit administration.

A pivotal moment in the banking sector's history occurred in April 1989 when the Reserve Bank of Malawi Act of 1965 and the Banking Act of 1965 were replaced with the Reserve Bank of Malawi Act of 1989 and the Banking Act of 1989. These legislative changes created an environment conducive to enhanced competition, greater savings mobilization, and improved financial intermediation. Subsequently, the nineties witnessed the entry of new banking institutions, such as Indefinance, Finance Company of Malawi (FINCOM), First Merchant Bank (FMB), and Finance Bank of Malawi (FBM). During this period, the POSB merged into Malawi Savings Bank.

Presently, the banking sector encompasses commercial banks, development finance institutions, and discount houses. Commercial banks primarily engage in financial intermediation, including accepting deposits and extending loans. Various deposit products are offered in the sector, such as savings, current, and fixed or term deposits. Credit facilities provided encompass personal loans, corporate loans, asset-based loans, trade finance, and overdrafts. The operations of this sector are governed by the Banking Act of 2010, the associated directives, and the Financial Services Act of 2010.