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Supervision

The Registrar conducts ongoing supervision to ensure safety and soundness of banking institutions in order to promote confidence and safeguard integrity of the banking sector. The Registrar monitors the risk profile of banking institutions as well as operational and compliance aspects to identify areas of elevated risk, non-compliance, and adequacy of mitigating measures. Appropriate enforcement action is taken in the event of non-compliance and other adverse developments.

Ongoing supervision is conducted through off-site surveillance and on-site examinations. The supervisory approach is risk based which entails allocating supervisory resources to areas of high risks. From 2014, Malawi uses the standardized approaches for computation of capital charges for credit risk and market risk, and the basic indicator approach for operational risk in line with Basel II Framework.

Off-site surveillance involves monthly and quarterly review and analysis of statutory returns submitted by banking institutions through Bank Supervision Application (BSA). The review enables the Registrar to periodically monitor conduct of business by the licensees and to ascertain financial soundness and regulatory compliance with prudential requirements.

On-site examination of banking institutions involves:

  1. assessing the level of risks inherent to banking institutions;
  2. evaluating effectiveness of risk management system and internal controls in identification, measurement, monitoring, and controlling of risks inherent to the institution’s operations;
  3. determination of residual risks faced by banking institutions; and.
  4. assessing banking institutions’ compliance with financial service laws.

The types of on-site examinations include:

  1. Routine Examination: carried out for a banking institution as per examination planning cycle which may be full scope - covering all risk areas or targeted on specific areas;
  2. Ad Hoc: triggered by an adverse event within the institution or market; or
  3. Follow Up: conducted to ascertain implementation of recommendations from a routine or ad hoc on-site examination.