BANKING

CHAPTER 44:01
BANKING

ARRANGEMENT OF SECTIONS

    SECTION

PART I
PRELIMINARY

    1.    Short title

    2.    Interpretation

    3.    Application of the Financial Services Act

PART II
LICENSING OF BANKS

    4.    Licensing of banks

    5.    Conditions for licensing of banks

    6.    Limitation on shareholding

    7.    Licensing criteria

    8.    Suspension or revocation of licence

    9.    Register

PART III
PRUDENTIAL SUPERVISION

Division I
Obligations of Banks

    10.    Capital funds and minimum capital ratios

    11.    Directives related to accounting policies of banks and financial institutions

    12.    Restriction of cash dividends

    13.    Submission of periodic returns to the Registrar

    14.    Supervision of banks and financial institutions

    15.    Exchange of information

    16.    Appointment of external auditor

    17.    Duties of external auditors to a bank

    18.    Requirements on bad debt provisions

    19.    Records, books of account and information to be kept

Division II
Structural Matters and Limitations

    20.    Prohibited transactions

    21.    Equity investments privately held by liquidated or divested investor

    22.    Restricted transactions

    23.    Matters that may be covered by the Registrar’s directives

    24.    Restrictions on loans to shareholders, directors, officers, employees and to their relations, etc.

    25.    Actions requiring prior approval

Division III
Enforcement and Other Remedial Measures

    26.    Enforcement action by the Registrar

    27.    Provisions relating to statutory management or closure of banks

    28.    Registrar to determine action on bank placed under statutory management

PART IV
WINDING-UP

    29.    Liquidation or winding-up of a bank

    30.    Powers of a liquidator

    31.    Liquidator to report on custodial assets and liabilities

    32.    Preference of certain claims

    33.    Financial records, audit and release of liquidator

    34.    Companies Act applicable in case of winding-up

    35.    Entries in bank books and evidence of depositor claim

    36.    Unclaimed funds after winding-up

    37.    Expenses relating to liquidation

PART V
MONETARY SUPERVISION

    38.    Monetary directives

    39.    Administrative penalty

PART VI
ABANDONED PROPERTY

    40.    Abandoned property to be delivered

PART VII
FIDUCIARY OPERATIONS

    41.    Fiduciary operations to be specially permitted

PART VIII
MISCELLANEOUS PROVISIONS

    42.    Identification of depositor by thumb impression

    43.    Use of the word “bank”

    44.    Advertisement of financial services

    45.    Board of directors for a bank

    46.    Conflict of interest

    47.    Additional responsibilities of the board

    48.    Additional duties of directors

    49.    Liability of executive officers, etc.

    50.    Prohibited remuneration of directors, officers and others

    51.    Customer due diligence

    52.    Violations of this Act to be published

    53.    Inconsistency with the Companies Act

    54.    General offence and penalty

    55.    Regulations

    56.    Continuity of banking licence

    57.    Transition period

10 of 2010

    An Act to provide for the regulation of the business of banking in Malawi, and to provide for matters incidental thereto and connected therewith

PART I
PRELIMINARY

1.    Short title

    This Act may be cited as the Banking Act.

2.    Interpretation

    (1) In this Act, unless the context otherwise requires—

    “bank” means a person who conducts banking business in Malawi, including by accepting funds withdrawable by cheque or transferable by other means;

    “banking business” means the business of receiving deposits or deposit substitutes from the public that are—

    (a)    payable, with or without interest, on demand, or after the expiration of a stated period; and

    (b)    transferable by cheque or by other means.

    “banking licence” means a licence granted by the Reserve Bank of Malawi and issued under the Financial Services Act to carry on banking business;

    “capital” includes paid-up capital and unimpaired reserves;

    “close relation” means spouse, brother, sister, parent, child, child of the spouse and the spouse of any of these and also includes a business partner and the close relations of the business partner;

    “controlling party” has the meaning ascribed to that term in the Financial Services Act;

    “company” means any company incorporated or registered as such under the Companies Act;

    “core capital” means paid-up share capital and disclosed reserves, with the latter being defined as the total of statutory reserves, retained profits from prior years, share premium, and sixty per cent of after tax profits in the current year to date (or in the case of loss, one hundred per cent of that loss), less unconsolidated investments in financial companies;

    “credit facility” includes financing by means of loans, leases, advances, establishing a line of credit, factoring, hire purchase, accepting of trade and other bills, discounting of such bills and notes, the opening or confirming of documentary credit, the issue of other letters of standby, guarantee or surety, the undertaking to pay on account of another person, and such other similar undertakings as may…