A legal battle that has stretched for more than two decades has ended with a massive financial blow to the Reserve Bank of Malawi (RBM), exposing taxpayers to a substantial financial liability.
The Supreme Court of Appeal has ordered the central bank to pay Finance Bank of Malawi (FBM) K300 billion in compensation for the unlawful closure of the bank in 2005.
The award is significantly lower than the K1.1 trillion that the defunct commercial bank had demanded following a February 3, 2026 Supreme Court judgment which declared the revocation of its banking licence unconstitutional.
According to a ruling delivered by Supreme Court Registrar Ibrahim Hussein after an assessment of damages, the compensation package comprises K157.471 billion for loss of business and profits, K138.124 billion for malfeasance in public office, and K150 million for breach of constitutional rights.
The latest ruling stems from a landmark Supreme Court decision in February 2026 which found that RBM unlawfully suspended and shut down Finance Bank in 2005.
Finance Bank, then a licensed commercial bank regulated under the Banking Act, was first suspended from conducting foreign currency operations in May 2005.
RBM subsequently recommended that the Minister of Finance revoke the bank’s licence, citing alleged irregular foreign exchange transactions and violations of Know Your Customer (KYC) requirements.
The bank challenged the decision in court, arguing that the regulatory actions were unlawful and had caused substantial financial losses.
After years of litigation, the Supreme Court ruled in favour of Finance Bank, holding that the closure was unconstitutional and directing that damages be assessed.
Meanwhile, Attorney General Frank Mbeta has indicated that government is not ready to accept the ruling without challenge.
Mbeta told the local media that he will first study the judgment before deciding on the next course of action, including filing an application for review.
