Parliamentary committee obtaining submissions on banking amendment bill

2
Parliamentary committee obtaining submissions on banking amendment bill
Parliamentary committee obtaining submissions on banking amendment bill

Africa-Press – Malawi. The Budget and Finance Committee of Parliament is this week expected to meet officials from all eight commercial banks in a bid to obtain their submissions on the controversial Banking Act Amendment Bill of 2022.

According to a programme released by Parliament’s secretariat, the meetings will take place from Tuesday to Thursday at Parliament Building in the Capital, Lilongwe.

The meetings come after Parliament had referred the Banking Act Amendment Bill to the Budget and Finance Committee as the main opposition, the Democratic Progressive Party (DPP), feared it might scare investors. But the government reportedly disputed DPP’s fears.

The bill seeks to amend the Banking Act to provide more options for dealing with ‘failing banks’ at the same time protecting people who deal with the banks.

Among others, the bill gives power to the Registrar of Financial Institutions to facilitate mandatory recapitalization of ‘failing banks’, carry out a purchase and acquisition transaction involving the transfer of assets and liabilities of a failed bank without requiring prior approval of shareholders.

According to the schedule for the meetings, on Tuesday, the Budget and Finance Committee will meet officials from my MyBucks, Standard Bank and NBS Bank.

On Wednesday, the committee will meet National Bank, FDH Bank and Ecobank officials. Meetings with First Capital Bank and CDH Investment Bank officials will take place Thursday.

When he presented the Banking Act Amendment Bill in the last sitting of Parliament, the Minister of Finance and Economic Affairs, Sosten Gwengwe, reportedly told the House that the current legal framework for early intervention and resolution of banks is inadequate and requires significant reforms to align it with best practices.

However, DPP spokesperson on finance in Parliament, Ralph Jooma, had reportedly argued that there are some clauses in the proposed amendment that have the potential to scare away investors.

He said the bill failed to balance the need between protecting property rights of the investors and protecting the depositor without harming the investor himself. He claimed there is a clause that indicates that an investor who is deemed not to be fit and proper has both his shares and voting rights withdrawn.

He added there is another provision that says if a shareholder has been charged with a criminal offence, the Registrar of Financial Institutions would continue to punish the shareholder whether found guilty or not.

Gwengwe, however, had reportedly argued that the bill is meant to help the depositors because when the financial institutions fail, it is the depositors that are in disarray. He said it was just a misunderstanding that the bill, whose consultations started in 2013, was not protecting the shareholder.

He added it was not true that the Registrar of Financial Institutions would punish a shareholder even after the courts clear them of criminal charges, but an acquittal would “not preclude the registrar from enforcing other punishments according to this Act”.

For More News And Analysis About Malawi Follow Africa-Press

LEAVE A REPLY

Please enter your comment!
Please enter your name here