The Reserve Bank of Malawi (RBM) has described the Supreme Court of Appeal ruling ordering it to compensate Finance Bank Malawi as a “sad development” for both the bank and the wider economy.
RBM spokesperson Maliketi Banda said in an interview with Malawi24 that the central bank hopes key factors of the bank will be considered in any compensation assessment.
The court ruling stems from the unlawful revocation of Finance Bank’s licence in 2005, a move the court found was procedurally flawed and outside the law.
The compensation is estimated at around K650 billion.
Finance Bank’s licence had been withdrawn over alleged regulatory breaches, including foreign-exchange irregularities, weak corporate governance, and failure to meet Know Your Customer (KYC) standards.
Shareholders contested the closure, arguing that RBM failed to follow due process and imposed a disproportionate sanction.
The Supreme Court of Appeal agreed, ordering the State to compensate the bank for losses incurred nearly two decades ago.
Economists have warned that such a payout could strain public finances, with K650 billion representing roughly 3% of Malawi’s GDP. Christopher Banda noted the potential “crowding out effect” on key sectors and stressed the need for stronger regulatory documentation and independence.
Abel Mwenibanda echoed the concern, saying the ruling could impact investor confidence and place further pressure on an already constrained economy.
He emphasized that laws should be applied fairly to protect both public resources and investor trust.
The decision also raises broader questions about accountability and governance within Malawi’s financial sector, highlighting the importance of clear regulatory processes and adherence to the rule of law.
