Govt attempts to block interest rate capping bill

Opposition Members of Parliament walked out of the House today after government attempted to shoot down the interest rate capping bill which seeks to put a limit on interest rates charged by banks.

Government wanted the House to tackle government business despite Thursday being a private member’s day.

Dowa West Member of Parliament Alexander Kusamba Dzonzi was expected to move a motion on the bill – officially known as Financial Services (Amendment) Bill – but DPP MP for Blantyre City Centre Themba Mkandawire asked to change the Order Paper so that the House could discuss general business.

When the members voted, 53 voted yes while 47 were against it. In protest, Malawi Congress Party and People’s Party MPs walked out of the chamber.

Dzonzi told the media that government MPs had been bribed to stop the bill.

“Malawians are watching and know that the government has been palm oiled to block the bill. DPP is denying Malawians the right to access lower lending and interest rates. We will still push for this bill back in the House, no matter when,” he said.

The bill was eventually tabled and Members referred it to a joint parliamentary committee for further scrutiny.

In his statement in the House, Dzonzi said Malawians are being crushed to death by the predatory interest rates which are imposed on them by banks and other lending financial institutions hence is Parliament’s duty to protect citizens.

“These predatory lending interest rates which rule the financial sector in the country Mr Speaker Sir, have created a sphere of massive exploitation on the unsuspecting borrowers; a majority of whom are widowed women and minors whose parents have passed on having borrowed from these institutions.

“The high interest rates pressures exerted on the borrowers Mr Speaker Sir, have resulted into failure by most of them to service the loans and in most cases leading to seizure of their properties and closure of their businesses,” Dzonzi said.

He said the bill seeks to amend the Financial Services Act by inserting in Part VII, a new section 34A which gives authority to the Registrar of Financial Institutions to regulate policy rate, treasury bills rate, interest rates in general and setting a maximum amount that can be recovered from a borrowed amount.

He added that passing of the bill reduce public debt which is now at above K3 trillion, close the widening gap between the lending rates and the deposit rates and protect Malawians from predatory lenders who are “exploiting their clients by charging them immoral and satanic interest rates which go as high as 360% per annum.”