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Rates under CFTC radar

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The Competition and Fair Trading Commission (CFTC) says it will investigate should there be proof that National Bank of Malawi (NBM) and Standard Bank engaged some form of coordination in setting their new base lending rates.

Wednesday, NBM and Standard Bank separately announced adjustments to their interest rates with base lending rate for both banks pegged at 32 percent. The base rate is the minimum interest rate on which financial institutions base the rates they use for lending.

Standard Bank and NBM are leaders in the financial services sector.

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Director for Consumer Welfare and Education at CFTC, Lewis Kulisewa, said CFTC has noted with interest the adjustments and that of particular interest to the Commission would be how the banks arrived at the new interest rates.

Kulisewa said the uniform rates do not contravene competition laws if set independently by the two banks but that if there was some form of coordination between the two banks, then that would become a matter of concern under the Competition and Fair Trading Act.

“In that regard, upon getting proof that there was coordination in arriving at the interest rates, the Commission will take appropriate action,” he said.

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Commercial banks have started reacting to a decision by the Monetary Policy Committee of the Reserve Bank of Malawi cutting the policy rate from 27 to 24 percent with adjustments in interest rates.

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