National Bank of Malawi (NBM) plc on Friday, 28th June 2021, launched a new product called Kasupe Finance which is a new financing model for Village Banks and other micro-credit groups. The National newspaper Business Editor Chikondi Chiyembekeza sat down with NBM plc Head of Retail Banking Oswin Kasunda to gain understanding on the new offering. Excerpts;
Q: NBM plc has recently introduced a service offering known as Kasupe Finance targeting Village Banks. Why are you reaching out to Village Banks?
A: To start with, Village Banks are basically referred to as informal self-help groups that operate a microcredit methodology in which financial services are administered among themselves. Malawi has experienced an exponential growth in the number of these self-help groups recently. Village Banks have become so predominant because unlike other formal financial institutions, they offer instant funding without stringent terms or conditions such as provision of collateral, proven business track record and other underwriting requirements. Based on extensive research conducted with several Village Banks across the country, NBM plc identified a gap in the Village Bank model on bridging finance and transactional accounts for the groups as most of them did not operate bank accounts. To help facilitate financial inclusion, the Bank designed a service offering that would enable groups to satisfy their demand for funds, (especially at the beginning of their cycle when accumulated contributions are still low), facilitate members’ contributions, loan disbursements, repayments and final distribution of accumulated funds. In a nutshell, NBM plc would like to assist these informal groups with a means to access various financial products and services through the Kasupe Finance.
Q: Some of your competitors already have Village Bank Finance offerings. What sets the NBM plc package apart from the rest?
A: Kasupe Finance is a package whose value proposition is the creation of a partnership between NBM plc and Village Banks. Apart from a transactional account, this package offers credit to qualifying groups with a minimum loan amount of K2 million and a maximum of 75% of the group’s annual contributions. The repayment period for this loan is a maximum of 10 months. No tangible collateral is required for this loan and the interest rate will be 6.1% above Reference Rate per annum which translates to 1.51% per month for the time being. You will agree that this is much lower than the interest charged by most Village Banks operating within the country.
Kasupe further includes business management coaching to share crucial business and financial management insights with group members as we are cognizant of the fact that most group members are engaged in small to medium scale businesses. Service fees are waived for the initial six months, with a subsidized fee cheque book. Access to NBM plc’s Internet Banking platform – Banknet360 will be free as we would like to promote use of digital platforms in these digital and Covid 19 times.
What does the Bank intend to achieve with Kasupe Finance?
A: We would like to enhance financial inclusion, reach out to various sector groups and create business synergies. It will also enable village banks to have access to a cheaper source of funds to be lent to their group members particularly during their lean periods. This offering will enhance financial inclusion for the non-banked, enable the Bank to diversify its service offering and remain competitive.
Q: What do groups require to be eligible for this offering?
A: Kasupe is available to Village Banks operating as Trusts or Clubs and Societies that have operated for at least one year and keep records of their financial transactions. Those that already have an account open with the Bank may convert this to Kasupe Finance through the provision of minutes from their group meeting indicating the conversion intent after which they will fill out the necessary documentation.
Q: Your closing word on Kasupe Finance?
A: Kasupe Finance is a well thought out, inclusive package meant to empower Village Banks and help them succeed in their individual and collective initiatives. The Retail Banking Division’s Account Relationship Managers are on call to provide financial guidance to those that require it. Previously, Village Banks wanted nothing to do with Banks but with Kasupe, we are confident they will understand that they can partner with the Bank to do even bigger things with their group finances. We’ve launched a promotion termed ‘Agulu Lathu’ where 5 village banks will win a share of K7 million – to inject a little something into their group earnings.