ARRANGEMENT OF SECTIONS
1. Short title
ESTABLISHMENT OF THE BANK
PRINCIPAL OBJECTIVES OF THE BANK
4. Principal objectives of the Bank
4A. Independence of the Bank
CAPITAL AND RESERVES
5. Capital and reserves
ORGANIZATION AND ADMINISTRATION
6. Board of Directors
7. Persons not eligible for appointment as directors
8. Resignation of directors
9. Termination of appointment as director
10. Procedure for the removal of a director
11. Meetings of the Board
11A. Disclosure of interest
11B. Committees of the Board
12. The Governor and Deputy Governors
12A. Qualifications for appointment
13. Executive duties of Governor and Deputy Governor
13A. Resignation of the Governor or Deputy Governor
14. Appointment of officers and staff of the Bank
15A. Protection of officers
15B. Code of Conduct
16. Unit of Malawi currency
17. Sole right to issue legal tender
18. Provisions for issue of Malawi currency
19. Denomination, description and form of notes and coins
21. Lost and damaged currency
22. Exemption from stamp duty
23. Offences relating to bank notes
24. International value of Malawi currency
25. Foreign assets
26. Trade in foreign currency
27. Exchange control
POWERS AND FUNCTIONS OF THE BANK
28. General powers and functions
29. Prohibited activities
30. Monetary functions
31. Credit operations
32. Rediscount rate
33. Credit ceilings
34. Open market operations
35. Use of instruments
36. Reserve requirement
37. Cash reserves
38. Interest to banks and financial institutions
39. Banker and adviser to the Government
40. Short-term advances to the Government
41. Issue and management of Government securities
42. Agent of the Government
43. Government to consult the Bank on Government loans
44. Banker to other banks
45. Clearing systems
46. Lender to banks
47. Cooperation with banks
SUPERVISION OF BANKS AND OTHER FINANCIAL INSTITUTIONS
48-49. [Repealed by 5 of 2011]
ACCOUNTS AND STATEMENTS
50. Annual accounts
51. Accounts and audit
51A. Establishment of the Internal Audit Department
52. Accounts, annual reports and publication thereof
53. Determination of net results of the Bank
54. General Reserve Fund and appropriation profits
57. Income tax
58. Prohibited banking names
60. Promotion of development
61. Discharge of duties
62. Submission of information to the Bank
First Schedule: Code of Conduct for the Directors and Employees of the Bank
Second Schedule: Additional powers and duties of the Board
8 of 1989
12 of 1992
5 of 2011
14 of 2015
An Act for the establishment of the Reserve Bank of Malawi; to regulate the issue of bank notes and coins; to confer and impose on the Reserve Bank of Malawi certain powers and duties; to provide for matters connected with banking, currency and coinage; and for matters connected therewith and incidental thereto.
[1ST MAY 1989]
This Act may be cited as the Reserve Bank of Malawi Act.
In this Act, unless the context otherwise requires—
“agency” means any institution, other than a bank, established or appointed under section 18;
“Bank” means the Reserve Bank of Malawi established under section 3;
“bank” means a company as a bank under the Banking Act;
“Board” means the Board of Directors of the Bank established under section 6;
“Code of Conduct” means the code of conduct provided for under section 15B and set out in the First Schedule;
“controlling party” has the meaning assigned thereto in the Financial Services Act;
“convertible currency” means any currency which is freely negotiable and transferable in international exchange markets at exchange rates consistent with the Articles of Agreement of the International Monetary Fund in force from time to time; “deposit liabilities” means liabilities arising from demand, time and savings deposits;
“Deputy Governor” means a Deputy Governor of the Bank appointed under section 12;
“director”, in relation to the Bank, means a member of the Board and includes the Governor and the Deputy Governors;
“external currency” means any currency, other than the currency issued by the Bank under this Act;
“financial institution” has the meaning assigned thereto in the Financial Services Act;
“financial services law” has the meaning assigned thereto in the Financial Services Act;
“Governor” means the Governor of the Bank appointed under section 12;
“Malawi currency” means the legal tender currency of Malawi issued by the Bank under this Act;
“statutory body” has the meaning assigned thereto in the Finance and Audit Act;
ESTABLISHMENT OF THE BANK
(1) The Reserve Bank of Malawi shall be a body corporate with perpetual succession and a common seal, capable of suing and being sued in its own name, and which, subject to this Act, may acquire, hold and dispose of movable and immovable property for the purpose of its functions.
(2) The Bank shall have its head office in Lilongwe and may open branches in Malawi and appoint agents and correspondents in accordance with the decisions of the Board.
(3) The common seal shall be affixed under such conditions as the Board may from time to time determine.
PRINCIPAL OBJECTIVES OF THE BANK
(1) The principal objectives of the Bank shall be—
(a) to issue legal tender currency in Malawi;
(b) to act as banker and adviser to the Government;
(c) to maintain external reserves so as to safeguard the international value of the Malawi currency;
(d) to implement measures designed to influence the money supply and the availability of credit, interest rates and exchange rates with the view to promoting economic growth, employment, stability in prices and a sustainable balance of payments position;
(e) to promote a sound financial structure in Malawi, including payment systems, clearing systems and adequate financial services;
(f) to promote a money and capital market in Malawi;
(g) to act as lender of last resort to the banking system;
(h) to support the regulation and supervision of Financial institutions in accordance with financial services laws;
(i) to collect economic data of the financial and other sectors for research and policy purposes; and
(j) to promote development in Malawi.
(2) In pursuing, or in performing any functions in the pursuit of, its principal objectives, the Bank shall act with due regard to the interest of the national economy and to the economic policies of the Government.
(1) Except as provided by this Act, the Bank shall be independent and shall not be subject to direction by any person or authority.
(2) Any person who improperly seeks to influence the Bank, or a director or employee of the Bank, in the performance of its or his functions, commits an offence and shall, on conviction, be liable to a fine of K1,000,000 and to imprisonment for four years.
(3) If, after consultation with the Governor, the Minister is of the opinion that—
(a) a policy being pursued by the Bank is not adequate for, or conducive to, the achievement of the objects of the Bank as set out in Part III, or in a financial services law; or
(b) it is in the national interest to do so,
the Minister may, by written direction, determine the policy to be adopted by the Bank.
(4) A direction under subsection (3) shall not relate to an individual financial institution.
(5) A direction under subsection (3) shall state that the Government accepts responsibility for the policy determined in the direction.
(6) The Bank shall give effect to the policy set out in a direction under subsection (3) while the direction remains in force.
(7) A direction under subsection (3) shall be published in the Gazette within seven days after it is given to the Bank.
CAPITAL AND RESERVES
(1) The capital of the Bank shall be three million Kwacha.
(2) The capital may, from time to time, be increased by such amount as the Board may resolve with the consent of the Minister, and the Government shall subscribe and pay up, at par, the amount of such increase; and the Government shall ensure that the Bank is kept solvent at all times.
(3) The capital shall be exclusively held by the Government.
(4) The Bank shall create and maintain reserves in accordance with section 54 of this Act.
ORGANIZATION AND ADMINISTRATION
(1) There shall be a Board of Directors of the Bank.
(2) The Board shall consist of the Governor, at least one but not more than three Deputy Governors, and at least four but not more than seven directors, who shall include the Secretary to the Treasury and the Secretary responsible for Economic Planning and Development:
Provided that at all times, the majority of the directors shall be non executive directors.
(3) The directors shall be appointed by the President for a term of three years and shall be eligible for re-appointment for one more term:
Provided that, with a view to ensuring continuity, appointments and re-appointments to the Board shall, wherever practicable, be made in such a way that at least one-half of the number of directors shall continue to serve on the Board.
(4) A person shall not be appointed a director unless the President is satisfied that the person is a fit and proper person to hold the office of a director and qualified for appointment by virtue of his knowledge of, or experience in, one or more of the following fields—
(c) financial markets, financial products or financial services;
(d) financial sector supervision and regulation;
(f) accounting; or
(g) other fields relevant to central banking.
(5) Appointments and reappointments to the Board shall be made with a view to ensuring that at all times the Board has an appropriate range of relevant skills and experience.
(6)The Board shall be responsible for the administrative and management policies of the Bank, and shall oversee the operations, administration and management of the Bank and the exercise of the powers and functions of the Bank with a view to ensuring that the operations, administration and management of the Bank are being conducted in a proper, efficient and effective manner.
(7) Without limiting the generality of subsection (6), the Board shall have powers as outlined in the Second Schedule.
(8) The Minister may, on the recommendation of the Board, by order published in the Gazette, amend the Second Schedule.
(9) Every Director shall be entitled to such fees and allowances as the Board may, with the approval of the Minister, determine.
The following persons shall not be eligible to be appointed as director—
(a) a member of Parliament;
(b) a financial institution, or a director, salaried official or employee of a financial institution;
(c) a controlling party of a financial institution;
(d) a person who provides or is engaged to provide, whether as a member of a firm or not, professional services to the Bank;
(e) a public officer, other than the public officer mentioned in section 6 (2);
(f) a person who is disqualified, whether in Malawi or elsewhere, from acting as a director or official of a body corporate under a law relating to corporations or to the provision of financial services;
(g) a person who at any time has been adjudged bankrupt by a competent court, whether in Malawi or elsewhere, or who, whether in Malawi or elsewhere, has made an arrangement or composition with, or has suspended payment to, his creditors;
(h) a person who has at any time been convicted, whether in Malawi or elsewhere, of theft, any offence involving an element of dishonesty, fraud, forgery, issuing of a forged document, or perjury or any similar offence; and;
(i) a person removed by a court of competent jurisdiction, whether in Malawi or elsewhere, from an office of trust on account of misconduct in the exercise of his duties in that office.
A director may resign his office by giving one month's notice in writing to the President.
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