Reserve Bank of Malawi

Financial Sector Regulation (FSR) - About

About FSR

The Financial Sector Regulation Department was established on 22 August 2017 as one of the departments within the Supervision Function of the Reserve Bank of Malawi. The creation of the department followed the policy position taken by Registrar of Financial Institutions to separate regulation of financial institutions from the supervision of the same in a bid to achieve independence and efficiency in the regulatory process. Accordingly, all licensing of financial institutions, development of regulatory frameworks and enforcement of compliance is under the jurisdiction of the Financial Sector Regulation Department.

Vision Statement

The vision of the Department is to be a department of excellence that promotes financial sector regulation, financial consumer protection and financial education for financial sector stability.

Mission Statement

As Financial Sector Regulation Department, we are in the business of managing entry into the financial services sector as well as developing and enforcing adequate regulatory framework for the financial sector through a professional and competent staff.

Values

In pursuing this, we believe in transparency, integrity, professionalism, innovation, team work and efficiency to support the Bank’s strategic objectives.

Objectives of the Financial Sector Regulation Department

The Financial Sector Regulation Department supports the Bank’s Strategic Objectives of ensuring that legal, regulatory and supervisory frameworks are in place, compliance with laws and standards by all financial institutions, and deepening and broadening the financial system.

Accordingly, the Department’s main objectives are as follows:

  1. ensure that legal, regulatory and supervisory frameworks are in place;
  2. ensure compliance with laws and standards by all financial institutions
  3. broaden and deepen the financial system through supporting the establishment of a Deposit Insurance Scheme for Malawi and promote financial inclusion initiatives
  4. Promoting innovative platforms and regulation that supports inclusive finance, to allow for higher access and usage of financial services to a larger population.
  5. promote financial consumer protection through financial literacy and regulation of financial institutions market conduct.
Key Result Areas

The Department has the following key result areas that will drive achievement of the mission:

  1. Entry Control: Entry regulation promotes financial stability by ensuring that only eligible financial institutions operate in the economy and that institutions have fair treatment of customers at the centre of their organisation culture. It is the first and most critical activity in the supervisory and regulatory continuum. This key result area is anchored by the Financial Services Act, 2010 and other sector specific financial services laws including the Credit Reference Bureau Act, 2010, Credit Reference Bureau (Amendment) Act, 2016 and International Standards. Since entry regulation is the first line of defence towards maintaining a safe, sound and stable financial system, hence stakeholder confidence, the Department will endeavour to operate professionally and vigilantly in line with international standards and licensing procedures to make sure that all requirements regulating entry are transparent to the public and are properly adhered to.
  2. Regulatory Development: This involves establishment and maintenance of regulatory and supervisory framework to ensure prudent risk management by financial institutions. The regulatory framework comprises of the various laws, directives, regulations, guidelines and circulars in various areas. In terms of supervision, the framework consists of various reporting templates and manuals to allow for on-going monitoring of financial condition of each class of financial institutions. The Department shall ensure that the regulatory frameworks for financial institutions are in tandem with international standards and best practice whilst at the same time re-aligning them to the local environment. The existence of an appropriate legal framework is therefore the main goal under this key result area.
  3. Enforcement: This involves implementing timely and effective responses to non-compliance with regulatory framework by market players. The Department shall ensure that violations are identified early and are acted upon promptly and consistently to effectively resolve the violation.
  4. Market conduct supervision and financial education: This involves supervision of financial institutions’ market conduct practices and handling financial consumers’ complaints to ensure that financial consumers are treated fairly. The Department also carries out financial education programmes to empower the general public with the necessary financial knowledge, skills and capabilities for informed financial decisions.
  5. Exit Administration: Effective on-going supervision identifies performance lapses, different degrees of violations and non-compliance with prudential and market conduct regulatory parameters. As stated above, interim measures are implemented to ensure compliance or corrective actions. However, when the situation cannot be salvaged by such interim measures, more severe remedial measures are taken by way of closure of a financial institution; transfer of assets; and placement under statutory management or receivership. The Department will endeavour to put in place proper exit ladders to aid smooth exit of financial institutions from the financial sector without causing undue distress to the entire financial system.

Contact Details

Further information or inquiries should be submitted to:

The Director
Financial Sector Regulation Department
Reserve Bank of Malawi
P. O. Box 565
Blantyre
Malawi
Tel. No.: (265) 1 820 299
Fax No.: (265) 1 821 311
Email: fsr@rbm.mw