The Reserve Bank of Malawi (RBM) has revealed that 1,900 bank clients have benefited through loan moratoriums that commercial banks effected to cushion the impact of Covid-19 on customers.
It has transpired that the commercial banks have forgone K103 billion since the initiative was introduced.
RBM Governor, Wilson Banda, gave out the figures recently in Blantyre on the sidelines of the Institute of Bankers in Malawi annual conference.
He said the initiative has increased credit risks in the market.
“We have, and continue to witness increases in credit risks reflected through loan moratoriums extended to borrowers affected by the pandemic. Our recent assessment shows a total of 1, 900 customers benefiting from this relief, with a consolidated balance of K103 billion.
“This constitutes nearly 15 percent of total gross credit of the industry. Nearly all sectors have been negatively affected. However, tourism, wholesale and retail as well as manufacturing sectors have come out worse,” Banda said.
In an interview Bankers Association of Malawi (Bam) Chief Executive Office Officer, Lyness Nkungula, said the business portfolio has shrunk.
“In the wake of the novel coronavirus pandemic, banks are steering through unchartered waters. Despite this, banks are committed to help their clients to steer through challenges both during and post Covid-19.
“The concern is about a potential spike in impairments although banks are proactively managing this by contacting potentially troubled borrowers to restructure or reschedule their loans. The impact of the moratorium is that there is loss of income and that business portfolio has shrunk just like the economy has been affected,” Nkungula said.
In April this year, RBM announced a series of measures in partnership with Bam, Malawi Unions of Savings and Credit Cooperatives as well as telecommunication firms.
The measures include a three-month moratorium by banks and Saccos to distressed customers which gave them a three month breather not to repay interest on loans.