Open Account

What is it?

An Open account payment is used for making payment to the foreign supplier for goods which have been received by our customers directly from the foreign supplier without any engagement of the bank.

How does it work?

The customers receives goods from a foreign supplier and presentsExchange control documents to the bank to facilitate the payment.

What are the benefits?

The customers do not have any risks since the obligation to pay rests on themselves.

What is the target market?

Importers and traders.

Pricing:

Commission: 1% Maximum MWK31,800

Minimum: MWK6,900

EC Application Charge: MWK5,220

Swift(Fixed): MWK21,050

Stamp Duty: MWK1.00

Standby Letter of Credit/ Foreign Guarantees

What is it?

A Standby Letter of Credit is a form of a guarantee which is used against non-performance of a contract. Its intention is to cover a non performance (default) situation.

How does it work?

When a foreign supplier requests our customer to issue a Standby Letter of Credit or Guarantee in their favor as a security for any future non-payment on any contract of supply of goods and /or service by the foreign supplier. Whilst any payment obligations by our customer are done through open account such that in case of default (non-payment to the supplier) by our customer, a demand by supplier will be called upon against the Guarantee for payment of any outstanding liabilities.

What is the target market?

Corporate customers engaged in major supply of goods or construction contracts.

What are the benefits?

  • When a Standby Letter of Credit / Foreign Guarantee is issued on behalf of our customer, the bank guarantees to the supplier that the bank will pay any claims that may arise due to non-payment by our customer up to the total amount of the guaranteed amount.
  • In the absence of this guarantee, customers are required to put cash up-front, thus risking and straining their cash flow.

Pricing:

Commission: 1.5% per 6 Months.

Minimum: MWK59,750

Documentary Letter of Credit

What is it?

  • A method of financing international trade, a letter of credit is better described as any arrangement whereby a bank, acting at the request of and on the instructions from a customer, is to make a payment to or to the order of a third party, or is to accept and pay bills of exchange drawn by the beneficiary against stipulated documents, provided that the terms and conditions of the Letter of Credit are strictly complied with.
  • In documentary Letters of Credit, all parties deal in documents, not goods.
  • Therefore an underlying status report on the supplier should be obtained before entering into a contract, to ensure that the supplier is a legitimately constituted and reputable concern and likely to deliver what is required.

How does it work?

  • If our customer wishes to import goods they request us to open a confirmed irrevocable letter credit and we will advise it to their supplier’s bank.
  • Depending on the contract and agreement with the supplier, the letter of credit may be drawn ‘at sight’ or ‘at usance’, but normally not exceeding 180 days.
  • Payment is then made upon presentation of documents, which strictly comply with the terms and conditions of the credit.
  • This facilitates smooth operation of trade between seller and buyer and also safeguards settlement especially when Forex is scarce. Letters of credit can be opened in any currency of the following currencies e.g. Dollars, Euros or Rand.

Special requirements

  • Formal limits for lines of credit to establish documentary credits are determined by the customer’s service centre Manager or Account Relationship Manager.
  • For non-borrowing customers upfront-cash margin will be required.

Prospective customers

  • All corporate customers who import goods or raw materials into the country.
  • Manufacturers who wish to source raw materials for manufacturing into final products and for re-export. 
  • Companies importing capital equipment.
  • Importers and trading firms.

Pricing

Cash Up Front

Commission: 0.75% per 3 Months

Minimum: MWK 28,600

Swift: MWK 41,650

Stamp Duty: 1.00

Without Cash Up Front

Commission: 0.75% per Month

Minimum: MWK 34,500

Swift: MWK 41,650

Stamp Duty: 1.00

Documentary Collections

A documentary collection is used to make foreign payment for goods when the risk of using open account is too high and where a documentary letter of credit is considered expensive.

How does it work?

Customer’s shipping documents covering imports into Malawi are forwarded by our customer’s suppliers through the banking system, to one of our service centres

in Malawi. The shipping documents are received with a set of instructions to release the documents against receipt of payment, against an undertaking to pay or against an acceptance of a bill of exchange.

What is the benefit to the customer?

  • When the shipping company/transport documents are sent through our bank, you are spared the problem of having to retain safely the documents in your company, and then later on arranging to remit the foreign currency for payment.
  • When the documents covered under documentary collections are processed through our bank, we are able to advise and arrange for any exchange control requirements, and also final remittance of funds to the overseas bank.
  • Through our overseas correspondents we are able to provide a worldwide documentary collection service covering both imports and exports and ensuring that funds are transferred as per the terms of instructions between buyer and seller.
  • The most important benefit is speed in transferring funds and security in handling documents.

Pricing:

Commission: 1% Maximum: MWK39,500

Minimum: MWK20,000

Swift (Fixed): MWK30,500

Bill Extension: MWK23,295

Bill Returned Unpaid on

Due Date: MWK27,850.00

Stop Payment on Bill: MWK24,000.00

Stamp Duty: 0.4%

Advance Payment

What is it?

It is payment on open account to a foreign supplier for goods which have not been received by our customers.

How does it work?

  • The customers obtain a pro forma invoice from a foreign supplier and presents to bank to facilitate the payment
  • The Pro forma invoice should indicate that advance payment is required and the beneficiary’s banking details.

Special requirements

  • Our customers are advised to make a due diligence on the supplier to avoid payment to fraudsters since they can receive the funds and not send the goods.
  • It is also a requirement that the payment should be reconciled by presentation of exchange control documents evidencing receipt of goods.

What is the target market?

Importers and traders.

Pricing:

Commission: 1% Maximum: MWK31,800

Minimum: MWK6,900

EC Application Charge: MWK16,675

Swift(Fixed): MWK21,050

Stamp Duty: MWK1.00

mission-vision

 Vision

To be the most successful financial institution in Malawi with international visible presence.

Mission Statement

To provide the best financial services in Malawi and internationally, distinguished by outstanding service, product innovation and sustained earning.