Malawi Parliament has passed a motion allowing the tabling of a bill which seeks to amend the Financial Services Act to include interest rate capping.
Member of Parliament for Dowa West Abel Kayembe moved the motion in Parliament this afternoon.
The approval of the motion allows Kayembe to table a private member’s bill that would introduce amendments to the Financial Services Act for purposes of regulating interest rates charged on loans and setting a limit of total interest payable on the principal of loans for the mutual benefits of customers, Banks and Government.
In his remarks on the motion, Kayembe said people in Malawi are being oppressed by exorbitant interest rates on the loans secured from financial institutions.
He noted that inflation in Malawi has been on a single digit for years but banks are charging interest rates that are close to 25 percent.
“Banks are exploiting Malawi Government and the general public because banks are charging more than is expected,” said Kayembe.
He further argued that interest capping will force banks to expand their customer base because as it is, banks can just overcharge their current customers and still make profits.
On his part, Member of Parliament for Lilongwe South East said the interest capping will help contain how banks are operating and protect borrowers from loss of property.
“This is going to help our people because legislation is the surest enabler which balances the sharing of resources in a nation,” the legislator said.