The monthly economic report by the Reserve Bank of Malawi has shown that commercial banks’ liquidity position decreased by 75%, from K24.04 billion in March, to K6.44 billion in May.

According to RBM spokesperson Mbane Ngwira, banks are facing liquidity challenges, saying the central bank may look at the possibility of extending more funds to the banking sector through the Lombard facility. The measures follow after RBM Governor Dalitso Kabambe announced some measures to incentivise commercial banks, amidst the coronavirus pandemic.

In order to ease banks operations, the Legal Reserve Ratio was reviewed downwards to 3.75%, which availed about K12 billion into the banking system as additional funds available to commercial banks to directly support distressed borrowers.