Banks scramble for village banks

Banks scramble for village banks

Post was last updated: June 2, 2021

Lyness Nkunguula

Commercial banks in the country have shown huge appetite to tap business from village banks by introducing tailor-made services and products.

This comes against a background that micro, small and medium enterprises (MSMEs) have described measures employed by the commercial banks, when they want to access finance, as deterrent through high cost of finance and collateral.

Over the years such traders have organised themselves into small groups of at least 10 to 15 members and lending to one another using cheap loans.

However, local commercial banks have come up with products to coax village banks to save money and access loans.

For example National Bank of Malawi plc has launched the Kasupe village bank product; Standard Bank plc launched the Nkhonde savings account while NBS Bank plc launched the Tidalilane village bank account.

Bankers Association of Malawi Chief Executive Officer Lynes Nkungula said commercial banks recognise that a more inclusive financial system is critical to development, hence the initiative.

“Formalising village savings will protect consumers from exploitation and, if the product is well managed, the risks could be very minimal. The purpose is not to wipe out the village banks but to work hand in hand,” Nkungula said.

In a separate interview, Managing Consultant for Intellect Link Consultants Pharrison Mwale said the development is an attempt by commercial banks to tap into members’ contributions to enhance their deposit base.

“The banks are indirectly tapping from the unbanked population through the village bank contributions,” Mwale said.

Source Link

Let us know what you think of this article and remember to add us on our facebook and follow us on our twitter. Come back daily for more Malawi business news.

Quick Links: Download Business eBooks | Ten Signs You Are An Entrepreneur | What is a Managing Director?