RBM persuades banks to slash VAT charges
By Matthews Kasanda
Reserve Bank of Malawi Governor Wilson Banda has said three of the country’s banks have completely removed Value Added Tax (VAT)- related charges while the remaining eight have slashed the charges by 50 percent following negotiations the central bank had with the lenders.
The financial institutions last month announced the introduction of VAT on some services following the government’s decision to introduce VAT on some banking services effective November 1.
Briefing journalists on Monday during a Government Face the Press section, Banda, who was accompanied by Malawi Revenue Authority Deputy Commissioner General Henry Ngutwa, Bankers Association of Malawi (Bam) Executive Director Lyness Nkungula and Information Minister Gospel Kazako, said negotiations with the banks yielded positive results.
He said the three banks have completely scrapped off the Auto Teller Machine (ATM) cash withdrawal transaction charges, while the other banks have reduced by 50 percent.
Banda said all banks have reduced over the counter transactions charges by a range of 30 to 40 percent while fees for printing account statements have been reduced from K5,000 to K500.
“In my view, this is a positive development, because the previous charges were prohibitive and punitive to customers who cannot afford to access their bank account statements through technology-based platforms,” Banda said.
The RBM chief said responding to the outcry, the Ministry of Finance and other concerned ministries convened a meeting on November 5 2021 when Cabinet ministers asked RBM to engage the banks on the matter.
“All banks significantly reduced charges and fees for common financial services and products,” Banda said.
On reduction of ATM withdrawal fees, the central bank wanted all the commercial banks to have a zero charge, but some banks raised concerns due to the costs they incur towards maintenance of the ATMs.
Nkungula clarified that despite the bank charges being reduced, the banks are still paying VAT to the government because it is a law requirement.
Nkungula further said every bank has displayed the charges in their banking halls reflecting their respective adjustments.
Kazako said there was a need to mention all the names of banks and adjustments they have made so that Malawians should be making informed choices when choosing a bank.
Meanwhile, four of the banks have also completely strapped off fees for closing accounts.