Commercial banks in the country have hiked their base lending rates in reaction to the Reserve Bank of Malawi (RBM) decision last week to adjust upward the policy rate.

According to published statements from some of the country’s commercial banks including Standard Bank plc, Ecobank, CDH Investment Bank and National Bank of Malawi plc, the base lending rates have been revised to a minimum of 13.5 percent and a maximum of 24.5 percent.

This is an adjustment from the earlier rate of 12.2 percent minimum and 23.2 maximum.

Depending on the product and customer, this means lending rates will hover between 13.5 percent and a maximum of around 24.5 percent.

In an interview, Black Indigenous Business Network trustee George Macheka expressed fears that the increase in the cost of credit will put businesses in a tough situation.

He said: “Most businesses operate on bank credit and any increase in cost of financing will certainly have a huge impact on the cost of doing business.

“As indigenous businesses, we will respond by enhancing internal cost control measures in the businesses so that every procurement should provide value for money. This will reduce the appetite for excessive adjustment of prices to the final consumer.”

Speaking ub a separate interview, Consumers Association of Malawi executive director John Kapito said the interest rates have only moved from bad to worse.

He said: “Interest rates were already high evidenced by consumer’s failure to repay the loans.

“This now means even tough times for consumers who will definitely have a hard time to service the loans.”

The revision follows RBM decision last week to adjust the policy rate by 200 basis points from 12 percent to 14 percent.

RBM Governor Wilson Banda said the central bank arrived at the decision after noting that inflation pressures continue to mount following persistence of the pandemic-induced supply-demand imbalances, supply- chain disruptions, and rising global energy and food prices, which have been compounded by the Russia-Ukraine war.

Last year, Vice-President Saulos Chilima asked the RBM to consider capping the interest spread, the gap between lending and deposit rates.

He said it is important that if banks raise the lending rates, they must also pass the same to depositors.

The Veep said: “I am not talking of capping the lending or deposit interest rates, but their difference. In other words, if banks raise the lending rates, they must pass the same to the depositors who lend them the money in the first place.”

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