BANKING AND FINANCIAL SERVICES ACT
Arrangement of Sections
Section
PART I
PRELIMINARY PROVISIONS
1. Short title
2. Interpretation
3. Application of Act
4. Relationship with other Acts
PART II
LICENSING OF FINANCIAL SERVICE PROVIDERS
5. Types of licences
6. Providing banking business, financial business or financial services without licence
7. Application for banking, financial business or financial institution licence
8. Grant of licence
9. Display of licence
10. Rejection of application for licence
11. Validity of licence
12. Authorised activities of banks
13. Transfer, pledge, assignment, encumbrance of licence
14. Variation of licence
15. Amendment of licence
16. Surrender of licence
17. Suspension or cancellation of licence
18. Loss or damage of licence
19. Opening branches, subsidiaries and other establishments
20. Representative office
21. Register of financial service providers
22. Publication of financial service providers
23. Appointment of Registrar and Deputy Registrars
24. Financial inclusion
PART III
OWNERSHIP AND CONTROL OF FINANCIAL SERVICE PROVIDERS
25. Limit on voting control
26. Divestment of control
27. Ownership
28. Prohibition of ownership of shares by trusts
29. Corporate restructuring transactions
30. Requirements for corporate restructuring transaction
31. Effect of corporate restructuring transaction
PART IV
CORPORATE GOVERNANCE
32. Responsibilities of Directors
33. Board meetings
34. Qualifications of directors, chief executive officers, chief financial officers
35. Non-executive directors to be in majority
36. Reporting obligations of Board and directors
37. Conduct of directors, chief executive officers, chief financial officers and managers
38. Disclosure of interest
39. False statement and obstruction of examinations
40. Suspension or dismissal of directors and senior officers by Bank and removal of shareholders
41. Fit and proper requirements
42. Corporate governance
PART V
BUSINESS OPERATIONS
43. Principal administrative office
44. Use and alteration of name
45. Business hours
46. Bank holiday
47. Records to be registered and maintained
48. Credit documentation
49. Manner of keeping records
50. Retention of records
51. Maintenance of records
PART VI
REGULATORY AND SUPERVISORY POWER BANK
52. Minimum capital requirements
53. Capital conservation buffer
54. Counter cyclical capital buffer
55. Restriction on payment of dividends
56. Leverage ratio
57. Maintenance of liquidity
58. Constraints on contracts with associated person
59. Examination of financial service providers
60. Submission of returns
61. Consolidated supervision
62. Affiliates and cross-border supervision
62A. Anti-money laundering and counter financing of terrorism supervision
63. Unsafe and unsound practices
64. Supervisory actions
65. Financial service provider suffering large losses
66. Undercapitalised financial service provider
67. Significantly undercapitalised financial service provider
68. Corrective actions against financial businesses
69. Modification, cancellation and upholding of regulatory statement
70. Notice of taking possession
71. Powers and duties of Bank on taking possession
72. [Repealed.]
73. Possession of financial service provider by Bank
74. [Repealed.]
75. Application to Court for termination of possession
76. Effects of possession
77. Restructuring and reorganisation
78. Refusal of restructuring or reorganisation
79. Restriction on execution of judgment
80. Recovery of expenses
PART VII
RESTRICTIONS ON TRANSACTIONS OF FINANCIAL SERVICE PROVIDERS
81. Secured borrowing
82. Limitations on granting credit facilities
83. Restriction on trade
84. Restriction on equity investments
85. Restriction on lease or other interest in real property
86. Limits, restrictions and prohibition on financial business and alternative financial services
87. Exemption of alternative financial services
PART VIII
FINANCIAL STATEMENTS AND ACCOUNTABILITY
88. Annual financial statement
89. Presentation of annual financial statement to shareholders
90. Reserve for bad and doubtful debts
91. Approval of annual financial statements
92. Publication of annual financial statements
93. Appointment of external auditor
94. Responsibilities of external auditor
95. Information by external auditor to Bank
96. Disqualification of external auditor
97. Access to information and auditor’s report
98. Termination of appointment of external auditor
99. Statement on resignation of external auditor
100. Termination of appointment of external auditor by financial service provider
PART IX
ANTI-COMPETITIVE ACTIVITIES AND CONSUMER PROTECTION
101. Collusive conduct
102. Collateral contracts
103. Coercive behaviour
104. Misconduct during debt collection
105. Determination of benchmark base rate
106. Disclosure of interest rates and charges
107. Increase in service charges
108. Responsible lending
109. Prohibition against penal interest
110. Recoverable amounts on nonperforming loan
111. Data protection and disclosure of information
112. Prohibition of anti-competitive practice
113. Complaints procedure for customers
114. Ombudsperson for financial service providers
115. Control of advertisements
116. Prohibition of unfair business practices
117. Prohibition of charges on prepayment
118. Unfair contract terms
119. Recognition of other laws
PART X
INSOLVENCY, DISSOLUTION AND LIQUIDATION OF FINANCIAL SERVICE PROVIDERS
120. Acceptance of deposits by insolvent financial service providers
121. Resolution to voluntarily wind-up or dissolve financial service provider
122. Duties of financial service provider on voluntary winding-up or dissolution
123. Notice of voluntary winding-up or dissolution
124. Rights of depositors and creditors
125. Distribution of assets on voluntary winding-up or dissolution
126. Powers of Bank where assets insufficient or completion unduly delayed
127. Powers of Bank in compulsory winding-up or dissolution
128. Powers of liquidator
129. Immunity of Bank against depositor or creditor claims
130. Limitation on filing of claims
131. Objection to liquidation schedule
132. Priority of creditors
133. Undistributed funds
134. Final distribution in compulsory winding-up or dissolution
135. Restriction of action by third parties
136. Power of Bank in relation to insolvent financial business
PART XI
COMPLAINTS AND APPEALS PROCESS
137. Reasons for decisions and right to be heard
138. Right of appeal
139. Appointment and convening of tribunal
140. Powers of tribunal
141. Decision of tribunal
PART XII
GENERAL PROVISIONS
142. Investigations
143. Access to documents
144. Offences committed partly in and partly out of Zambia
145. Continuing acts or offences
146. Actions by Bank on conviction for offence
147. Use of word "bank"
148. Restriction on use of name to indicate banking or financial business or financial service provider
149. Validity of certain acts by financial service provider
150. Power to summon officers, directors and shareholders
151. Submission of information and documents to Bank
152. Alternative financial services
153. Publication of information
154. Extension of time limits
155. False document
156. Immunity of officer, agent or employee of Bank
157. Money circulation schemes
158. Utilisation of collateral for settlement of certain obligations
159. Special reserve or liability insurance
160. Unclaimed funds and personal property
161. Delegated supervision
162. Exemptions
163. General penalty
164. Offences by body corporate or unincorporated body
165. Administrative penalties
166. Industry reports
167. Regulatory statements
168. Rules
169. Regulations
170. Repeal of Cap. 387
171. Savings and transitional provisions
AN ACT
to provide for a licensing system for the conduct of banking or financial business and provision of financial services; to provide for the incorporation of standards, principles and concepts of corporate governance in institutional systems and structures of banks and financial institutions; to provide for sound business practices and consumer protection mechanisms; to provide for the regulation and supervision of banking and financial services; to repeal and replace the Banking and Financial Services Act, 1994; and to provide for matters connected with, or incidental to, the foregoing.
[18th May, 2018]
Act 7 of 2017,
Act 7 of 2020,
SI 38 of 2018.
PART I
PRELIMINARY PROVISIONS
This Act may be cited as the Banking and Financial Services Act.
(1) In this Act, unless the context otherwise requires—
"advance" means—
(a) any direct or indirect payment of moneys, a loan or an extension of credit to a person or common enterprise—
(i) made on the basis of an obligation of that person or common enterprise repaying the funds; or
(ii) repayable from specific property pledged by, or on behalf of, a person or common enterprise;
(b) the credit risks arising from actual claims, potential claims and credit substitutes; or
(c) a commitment to extend credit or acquire a debt security or other right to payment of a sum of money;
"alternative financial service" means a financial service that applies specific regulatory rules based on religious principles;
"associated person" means—
(a) a company in which a person is a manager or director;
(b) each person that beneficially owns shares in the same company;
(c) a third person that owns or exercises, or is capable of exercising, directly or indirectly, significant control over a company or person referred to in paragraph (a) or (b);
(d) persons that are in a partnership;
(e) persons that are both members of a voting trust or other arrangement relating to shares, except that this paragraph does not apply to a financial business where—
(i) two or more persons are affiliated if the persons are companies that are controlled by the same person; and
(ii) a company is the subsidiary of another company and if more than 50 per cent of the issued voting shares of the company, other than qualifying directors’ shares, are owned directly or indirectly by the other company; or
(f) the spouse, parent, child, brother or sister of a person, or of the person’s parent, child, brother or sister;
"associate and association" shall be construed accordingly;
"articles of association" has the meaning assigned to the term in the Companies Act;
"bank" means a company authorised to conduct banking business in accordance with this Act;
"Bank" means the Bank of Zambia established in accordance with the Constitution;
"banking licence" means a licence specified in section 5 and granted in accordance with section 8;
"banking business" means—
(a) receiving deposits, including chequing and current account deposits, and the use of the deposits, either in whole or in part, for the account and at the risk of the person carrying on the business to make loans, advances or investments;
(b) providing financial services; and
(c) any custom, practice or activity, prescribed in rules issued by the Bank, as banking business;
"beneficial owner" means an individual who—
(a) exercises control over a financial service provider, legal person or arrangement; or
(b) owns or controls a customer or the person on whose behalf a transaction is conducted and, where two or more persons are associated through the beneficial ownership of shares in the same company, each person shall be a beneficial owner of the aggregate number of shares of the company;
"board" means the governing body of a financial service provider;
"body corporate" has the meaning assigned to the word in the Companies Act;
"borrower" includes a person who becomes indebted to a financial service provider due to a guarantee made for the repayment of an amount owed by another person;
"branch" means the permanent premises, other than the head office, at which a financial service provider conducts business in or outside Zambia;
"branchless banking" means the provision of banking services or financial services without relying on physical branches;
"bridge bank" means an institution created by the Bank to temporarily operate a failed bank or financial institution until a buyer is found for its operations;
"capital adequacy" means the legal capital prescribed by the Bank in terms of money or assets invested or available for investment in the business that is sufficient for the sustainability of the financial service provider;
"capital conservation buffer" means the mandatory capital that financial institutions are required to hold, in addition to minimum capital requirements, as prescribed, to be drawn down when losses are incurred during periods of stress;
"chief executive officer" means the person engaged by a financial service provider who is responsible, under the immediate authority of the board, for the conduct of banking business or financial services for the financial service provider;
"chief financial officer" means a person responsible for maintaining the accounts and accounting records of a financial service provider;
"chief risk officer" means a senior employee of a financial service provider with distinct responsibility for risk management functions and the financial service provider’s enterprise-wide risk management framework;
"company" has the meaning assigned to the word in the Companies Act;
"common enterprise" means an undertaking of two or more persons with an equal right to direct and benefit from the undertaking and where the negligence of any of the persons may be imputed to the others;
"common equity tier one" means the sum of the following—
(a) paid-up common shares issued by a financial service provider;
(b) share premium, resulting from the issue of common shares;
(c) retained earnings;
(d) accumulated comprehensive income and other disclosed reserves;
(e) common shares issued by consolidated subsidiaries of the financial service provider and held by a third party that meets the criteria prescribed by the Bank, for inclusion in common equity tier one capital; and
(f) regulatory adjustments, applied in the calculation of the common equity tier one, as prescribed by the Bank;
"compliance officer" means a senior employee of the financial service provider with overall responsibility for co-ordinating the identification and management of the financial service provider’s compliance risk and supervising the activities of the other employees responsible for the compliance functions of the financial service provider;
"confidential information" means information that is not public, regarding—
(a) the nature, amount or purpose of any payment made by or to a person;
(b) the recipient of a payment made by a person;
(c) the assets, liabilities, financial resources or financial condition of a person;
(d) the business or family relations of a customer; or
(e) any information of a personal nature that the customer disclosed, in confidence to the financial service provider;
"consumer" has the meaning assigned to the word in the Competition and Consumer Protection Act;
"control" means the control of a financial service provider by a person that—
(a) beneficially owns more than one half of the issued share capital of the company;
(b) is entitled to cast a majority of the votes that may be cast at a general meeting of the company, or has the ability to control the casting of a majority of those votes, either directly or through a controlled entity of that person;
(c) is able to appoint or to veto the appointment of a majority of the directors of the company;
(d) is a holding company and the financial service provider is a subsidiary of that company as provided for in the Companies Act; or
(e) has the ability to significantly influence the management, policy and affairs of the financial service provider in a manner comparable to a person who, in ordinary commercial practice, can exercise an element of control referred to in paragraphs (a) to (d);
"corporate" means a legal entity, including a company or body corporate, that is separate and distinct from its owners and which is recognised as such by law and acts as a single entity;
"corporate restructuring transaction" means a merger, takeover, amalgamation, reconstruction or acquisition where an entity, directly or indirectly, acquires or establishes control over the whole or part of the business of a financial service provider or where two or more financial service providers and another entity agree to adopt arrangements for common ownership or control over the whole or part of the business of a financial service provider, and includes such arrangements by an entity outside Zambia which affect a financial service provider in Zambia;
"counter cyclical capital buffer" means an amount of capital prescribed by the Bank to be maintained by banks and financial institutions where there is excessive build-up of credit that is likely to lead to a system wide risk;
"Court" means the High Court of Zambia;
"credit facility" includes an advance, loan, financial guarantee or any other liability incurred by a person;
"customer identification data" means—
(a) in the case of a natural person, the person’s—
(i) name, including any forename or maiden name;
(ii) permanent address;
(iii) telephone number, fax number or e-mail address;
(iv) date and place of birth;
(v) nationality;
(vi) occupation or public office held and the name of the employer;
(vii) official personal identification number or other unique identifier contained in a valid official document that bears a photograph of the person;
(viii) bank or other type of account and the nature of the relationship the person has with a financial service provider; and
(ix) signature; and
(b) in the case of a corporate, that corporate’s—
(i) registered name;
(ii) principal place of business;
(iii) mailing address;
(iv) contact telephone, fax number or electronic mail address;
(v) official identification number, such as the tax identification number or official registration number;
(vi) documents such as the original or certified copy of the certificate of incorporation, registration, articles of association or other internal governing rules confirming the legal existence of the account holder; and
(vii) board resolution to open an account and the identification documents of the persons authorised to operate the account;
"deposit" means—
(a) an amount of money received by a bank or financial institution in the ordinary course of business that—
(i) the bank or financial institution may transform into assets at its own risk;
(ii) is repayable on demand or at a specified or unspecified date, or on terms agreed to, by, or on behalf of, the person making the payments;
(b) an outstanding draft, a cashier’s cheque, money order or other officer’s cheque issued by the bank or financial institution and drawn on a customer’s funds for any purpose, in the ordinary course of business; or
(c) such other obligations of a bank or financial institution as the Bank may prescribe by rules issued in accordance with this Act,
excluding electronic money and instruments issued by a bank or financial institution in respect of an advance or for the purpose of fulfilling a payment for goods supplied or services rendered to the Bank;
"Deputy Registrar" means a person holding office or acting as a Deputy Registrar of Financial Service Providers appointed in accordance with this Act;
"director" means a natural person who holds office as a member of a board;
"discretionary payments" means any payments or distributions, other than dividends, that are within the discretion of the financial service provider to make and, if not paid by the financial service provider, are not an event of default, including staff bonuses;
"equity interest in a person" means—
(a) in the case of a company, any share issued by a company, the terms of which entitle the registered holder or bearer to a share in the profits of the company; or
(b) in the case of a partnership, association or other body of persons acting in concert, any right to share in the profits of that partnership, association or other body of persons acting in concert;
"equity interest in a property or undertaking" means an ownership interest, and includes any right to share in the profits of the operation or proceeds of disposition of the property or undertaking;
"financing" means the act or process of raising or providing funds;
"fit and proper requirements" means the criteria set by the Bank in accordance with section 41 and as the Bank may prescribe;
"financial business" means a body corporate that conducts a financial service business, excluding acceptance of deposits;
"financial business licence" means a licence specified in section 5(b) and granted in accordance with section 8;
"financial derivative" means a contract between two or more parties whose value is based on an agreed upon underlying financial asset, index or security;
"financial institution" means a company, other than a bank, providing a financial service;
"financial institution’s licence" means a licence specified in section 5(c) and granted in accordance with section 8;
"financial sector" means the subsector of the economy concerned with or related to financial, banking and monetary matters and provision of banking and financial services to commercial and retail customers including banks, investment funds and capital markets;
"financial service" means any one or more of the following services—
(a) commercial or consumer financing services;
(b) brokering;
(c) factoring, with or without recourse;
(d) finance leasing;
(e) financing of commercial transactions, including forfeiting;
(f) issue and administration of credit cards, debit cards, traveller’s cheques or banker’s drafts;
(g) issue of guarantees, performance bonds or letters of credit, excluding those issued by insurance companies;
(h) lending on the security of, or dealing in, mortgages or any interest in real property;
(i) payment of cheques or other demand orders drawn or issued by customers and payable from deposits held by the payer;
(j) purchase and sale of foreign exchange;
(k) issue of debentures and money market instruments;
(l) the acceptance of deposits;
(m) issue of building society and mutual society shares, with characteristics similar or identical to deposits;
(n) venture capital funding;
(o) micro-financing;
(p) development financing; and
(q) any other service that the Bank may designate, excluding the underwriting, marketing or administration of contracts of insurance or reinsurance;
"financial service provider" means a bank, financial institution or financial business;
"foreign financial service provider" means a financial service provider that is not incorporated in Zambia;
"foreign company" has the meaning assigned to the word in the Companies Act;
"insider" means—
(a) an officer, director or principal shareholder of a bank or financial institution;
(b) a person who participates or has the authority to participate in major policy-making functions of a bank or financial institution, whether or not employed by the bank or financial institution;
(c) a bank or financial institution in which a person referred to in paragraph (a) or (b) owns, directly or indirectly, alone or with one or more other persons specified in the paragraphs, more than 20 per cent of the shares; or
(d) a company in which a bank or a financial institution owns more than 10 per cent of the outstanding shares;
"insolvency" means a situation where a financial service provider—
(a) is unable to pay a debt when it falls due;
(b) has assets that are insufficient to meet liabilities; or
(c) has regulatory capital which is at zero or lower;
["insolvency" subs by s 2 of Act 7 of 2020.]
"licence" means a banking licence, financial institution licence, or financial business licence as the case may be;
"licensee" means a financial service provider holding a licence;
"manager" means an officer of a financial service provider who is in a position to control, direct or influence decision-making in a matter relating to banking business or financial services;
"meeting" has the meaning assigned to the word in the Companies Act;
"merchant banking" includes the underwriting of securities for corporations, advising on and arranging finance for mergers and takeover bids, the financing of foreign trade by accepting bills of exchange, underwriting new issues and investment management;
"money circulation scheme" means a plan, arrangement, agreement or understanding, between two or more persons that involves the pooling and distribution of funds by recruitment of subscribers, and which, for its continuous existence and realisation of its benefits, substantially depends on the incremental recruitment of subscribers for an unspecified period;
"money market instrument" means a negotiable instrument with an original term to maturity of 365 days or less;
"name" means the name by which a financial service provider is incorporated as provided by the Companies Act;
"nominee shareholder" means a person whose name appears on a company’s register as the registered shareholder but who holds the shares on behalf of another person;
"nonperforming loan" means a loan in respect of which payment of principal or interest is in arrears for more than 90 days;
"physical presence" means the physical location of a financial service provider within Zambia, or the control of the financial service provider;
"practitioner" has the meaning assigned to the word in the Legal Practitioners Act;
"primary capital" means the sum of the—
(a) common equity tier one; and
(b) additional tier one capital, as prescribed by the Bank by rules issued in accordance with this Act;
"principal administrative office" means the office in which the overall administration of the affairs of a financial service provider, other than its banking business or financial service business, is carried on;
"Register" means the Register of Financial Service Providers established and maintained in accordance with section 21;
"Registrar" means the person holding office or acting as the Registrar of Financial Service Providers appointed in accordance with this Act;
"Registrar of Companies" means the person appointed as Registrar in accordance with the Patents and Companies Registration Agency Act;
"Registrar of Lands and Deeds" means a person appointed as a Registrar in accordance with the Lands and Deeds Registry Act;
"regulatory capital" means the sum of the—
(a) primary capital; and
(b) secondary capital, as prescribed by the Bank, in rules issued in accordance with this Act;
"related party transaction" means a transaction in which two or more persons, by virtue of their relationship, benefit severally or jointly from funds or services arising from a transaction involving any one of them and a financial service provider;
"regulatory statement" means directives, guidelines, orders, circulars and bulletins issued by the Bank for the efficacious implementation of this Act, regulations and rules issued in accordance with this Act;
"repealed Act" means the Banking and Financial Services Act;
"representative office" means an office in Zambia belonging to or representing a foreign financial service provider;
"senior officer" means a chief executive officer, chief financial officer, manager or other management personnel of a financial service provider;
"shell bank" means a bank which does not have a physical presence in the country in which it is incorporated and licenced and which is unaffiliated with a regulated group to any financial service that is subject to consolidated statutory regulation supervision;
"significant shareholding" means a direct or indirect shareholding or beneficial interest of 10 per cent or more of the share capital of a financial service provider, and the words "significant shareholder" shall be construed accordingly;
"subsidiary" has the meaning assigned to the word in the Companies Act;
"tribunal" means an ad hoc tribunal to determine appeals constituted in accordance with section 139;
"unsafe and unsound practice" means—
(a) conducting the affairs of a financial service provider in a manner that is—
(i) detrimental to the stability of the financial sector or the interests of depositors and creditors;
(ii) prejudicial to the interest of the financial service provider; or
(iii) in contravention of this Act or any other relevant written law;
(b) accumulating a high volume of nonperforming loans;
(c) making secured loans based on inadequate collateral;
(d) maintaining an inadequate level of reserves for loan losses;
(e) maintaining an inadequate level of common equity capital;
(f) advancing loans without regard to the borrower’s ability to pay;
(g) maintaining inadequate liquidity; or
(h) any other practice that the Bank may designate as unsafe and unsound practice;
"venture capital funding" means risk capital given by investors to start up small or medium sized businesses with perceived high growth potential, and includes the mobilisation of funds from various sources in risky projects that would not normally attract conventional finance;
"voting shares" means common shares in the capital of a financial service provider and any other shares of any designation or description that carry the right to vote on a resolution at a meeting; and
"Zambia Institute of Chartered Accountants" means the Institute established in accordance with the Accountants Act.
(2) In this Act, unless the context otherwise provides, words and expressions used and which are not defined, but are defined in the Companies Act, the Corporate Insolvency Act, the Securities Act, or any other relevant Act, shall have the meaning assigned to them in those Acts.
(1) This Act applies to all financial service providers.
(2) This Act does not apply to—
(a) the Bank, except in so far as it expressly imposes a duty on the Bank; and
(b) a person registered in accordance with the Money Lenders Act.
4. Relationship with other Acts
(1) Where any written law relating to, or impacting on, banking business or financial services is inconsistent with this Act, the provisions of this Act shall, to the extent of the inconsistency, prevail.
(2) Despite sub-section (1), where there is an inconsistency between this Act and the Securities Act in relation to the regulation of securities, the Securities Act shall prevail to the extent of the inconsistency.
PART II
LICENSING OF FINANCIAL SERVICE PROVIDERS
The following licences shall be issued by the Bank in accordance with this Act—
(a) a banking licence, which shall authorise a licensee to conduct a banking business;
(b) a financial business licence, which shall authorise a licensee to conduct a financial business; and
(c) a financial institution licence, which shall authorise a licensee to provide a financial service.
6. Providing banking business, financial business or financial services without licence
(1) A company shall not conduct a banking business without a banking licence.
(2) A body corporate shall not conduct a financial business without a financial business licence, or provide a financial service without a financial institution licence.
(3) A person, without a banking licence, financial institution licence or a financial business licence, shall not collect funds by purporting to conduct a banking business, financial service or financial business.
(4) A person who contravenes sub-sections (1), (2) and (3) commits an offence and is liable, on conviction, to a fine not exceeding five hundred thousand penalty units or to imprisonment for a term not exceeding five years, or to both.
(5) Where a person obtains funds under sub-section (3), that person shall, in addition to the penalty imposed under sub-section (4), repay the funds in accordance with the Bank’s directives and within the period determined by the Bank.
(6) Where funds repayable under sub-section (5) remain unpaid at the end of the period determined by the Bank for repayment, the funds payable shall be recoverable by the Bank and kept in trust for the person lawfully entitled to the funds.
[S 6 subs by s 3 of Act 7 of 2020.]
7. Application for banking, financial business or financial institution licence
(1) An application for a banking licence, financial institution licence or financial business licence shall be made in the prescribed manner and form.
(2) An application for a licence, specified in sub-section (1), shall be accompanied by the prescribed application fee and shall have attached to it or contain the following—
(a) articles of association or other constitutive documents;
(b) physical and postal addresses of the principal administrative office;
(c) permanent residential addresses of the applicant’s directors, chief executive officer, managers;
(d) name and permanent residential address of every subscriber for any class or series of shares issued by the applicant;
(e) addresses of each branch proposed to be opened by the applicant and, in the case of a mobile office, the area proposed to be served;
(f) full particulars of the business it proposes to conduct;
(g) amount of the applicant’s capital; and
(h) names of the applicant’s associates and affiliates.
(3) An applicant may withdraw an application for a licence, by notice in writing to the Bank, in the prescribed manner and form, at any time before the licence is granted or the application is rejected.
(4) The Bank shall, in considering an application for a licence, made in accordance with sub-section (1), have regard to the—
(a) capital adequacy of the applicant;
(b) financial condition, resources and history of the applicant;
(c) applicant’s associates and affiliates;
(d) transparency of the legal, operational, managerial, governance and ownership structures;
(e) character and experience of the directors, significant shareholders, beneficial owners, founders or persons proposing to be concerned in the management of the banking business, financial business or financial service;
(f) convenience and needs of the community intended to be served by the banking or financial business or provision of a financial service; and
(g) prospects for the profitable operation of the banking or financial service business.
(1) Where an applicant meets the requirements of this Act, the Bank shall, within 120 days of receipt of an application for a licence made in accordance with section 7, grant a licence.
(2) A banking licence, financial business licence or financial institution licence for a subsidiary of a foreign company may be granted if—
(a) the foreign company is a financial service provider and is authorised to engage in banking business in the country where its principal place of business is located; and
(b) the Bank determines that the foreign financial service provider is adequately supervised by competent authorities in the country of incorporation.
(3) A licence granted in accordance with sub-section (1) or (2), may—
(a) contain terms and conditions that the Bank may determine in relation to the business as specified in this Act;
(b) provide for the payment of annual or other periodic fees that may be prescribed; and
(c) require the financial service provider to allow the Bank access to the offices, records, documents and information of the financial service provider whether inside or outside Zambia.
(4) A financial service provider shall not provide or offer to provide banking or financial services in breach of the terms and conditions of the licence.
A financial service provider shall display the licence issued to the financial service provider in a prominent place at its business premises.
10. Rejection of application for licence
(1) The Bank shall reject an application for a licence where—
(a) an applicant does not meet the requirements of this Act;
(b) a licence previously held by an applicant has been cancelled by the Bank;
(c) an applicant submits false information in relation to the application; or
(d) the name that a financial service provider is proposing to be registered is—
(i) identical with that of another financial service provider; or
(ii) resembles the name of another financial service provider and is likely to deceive the public.
(2) Where the Bank rejects an application for a licence, the Bank shall inform the applicant of its decision, in writing, within seven days of making the decision and shall give reasons for the rejection.
A licence shall remain valid unless surrendered by the financial service provider or cancelled by the Bank.
12. Authorised activities of banks
(1) A banking licence may, subject to the conditions of the licence, authorise a bank to engage in the following activities in addition to banking business—
(a) grant loans and extend credit, whether unsecured or on the security of property of any kind;
(b) deal as a principal or an agent in the currency of Zambia and, subject to the rules and regulatory statements, made in accordance with this Act, in the currency of any other country, foreign exchange transactions, gold, silver, platinum, bullion or coins;
(c) provide money transfer or transmission services from a customer’s account;
(d) issue and administer payment, credit or debit cards and, in co-operation with other prescribed service providers, the operation of payment, credit card and debit card systems;
(e) act as a trustee, executor or administrator of an estate or in any fiduciary capacity for any person;
(f) act as a financial agent for any person;
(g) provide safe-keeping and custodial services for financial assets and securities;
(h) provide merchant banking services, including the arrangement and underwriting of shares, trade financing, corporate financing and provision of financial advice;
(i) deal as a principal or agent for its customers in financial derivatives; and
(j) provide branchless banking services.
(2) The Bank may prescribe other authorised activities that may be undertaken by financial service providers which are not inconsistent with this Act.
13. Transfer, pledge, assignment, encumbrance of licence
(1) Subject to sub-section (2), a licence may, with the prior written approval of the Bank, be transferred, pledged, assigned or encumbered in the event of a corporate restructuring transaction.
(2) An application for a transfer, pledge, assignment or encumbrance of a licence, as specified in sub-section (1), shall be made to the Bank in the prescribed manner and form.
(3) The Bank may, within 30 days of receipt of an application made in accordance with sub-section (2)—
(a) approve the application on such terms and conditions as the Bank may determine; or
(b) reject the application and give reasons for the rejection.
(1) Subject to sub-section (2), the Bank may, on the application of a licensee or by its own motion, vary the terms and conditions of a licence.
(2) The Bank shall, before varying the terms and conditions of a licence, in accordance with sub-section (1), give notice, in writing, to the licensee of the Bank’s intention to make variations in the manner specified in the notice.
(3) The licensee may, within 30 days of receipt of the written notice, specified in sub-section (2), make written representation to the Bank on the proposed variation.
(4) The Bank shall, in deciding whether to vary a licence, have regard to section 7.
(5) The Bank shall, on varying a licence in accordance with this section, notify the licensee of the variation, in writing, and the notice shall state the effective date of the variation.
(6) Compensation shall not be payable by the Bank to a financial service provider for a variation to a licence made in accordance with this section.
(1) The Bank may, on application by a licensee, and on payment of a prescribed fee, amend a licence where—
(a) a person has succeeded title to the interest in the licence, by substituting the name of the successor in title; or
(b) the name of a financial service provider has changed, by substituting the name so changed.
(2) The Bank shall, before amending a licence as specified in sub-section (1), notify the public by publishing a notice in the Gazette and in a daily newspaper of general circulation or other media in Zambia.
(1) A licensee that intends to surrender a licence shall notify the Bank, in writing, in the prescribed manner and form of its intention to do so.
(2) A licensee shall agree with the Bank on the terms and conditions with respect to a surrender of a licence, with particular reference to any benefit obtained or liability incurred due to the licence or the requirements of any other relevant law.
(3) Where a licence is surrendered, in accordance with sub-section (1), and the Bank is satisfied that all liabilities are or will be satisfied and the requirements of the Companies Act, or the Corporate Insolvency Act, where applicable, have or shall be complied with, the Bank shall cancel the licence.
(4) Where the Bank cancels a licence surrendered in accordance with this section, section 17(7), (8) and (9), shall apply, with the necessary modifications.
17. Suspension or cancellation of licence
(1) Subject to this Act, the Bank may suspend or cancel a licence if the financial service provider—
(a) obtained the licence by fraud or submitted false information or statements;
(b) contravenes this Act or any other relevant written law;
(c) breaches any term or condition of the licence;
(d) effects a corporate restructuring transaction without the prior written approval of the Bank;
(e) fails to comply with a decision, rule or regulatory statement made by the Bank in accordance with this Act;
(f) fails to commence the business to which the licence relates within a period of 12 months from the date of grant of the licence;
(g) enters into receivership or liquidation or takes any action for voluntary winding-up or dissolution;
(h) enters into any scheme or arrangement, other than a corporate restructuring transaction;
(i) ceases to conduct the business authorised by the licence;
(j) is the subject of an order made by the Court or tribunal for its compulsory winding-up or dissolution;
(k) ceases to fulfil the requirements specified in or by this Act; or
(l) engages in unsafe and unsound practices.
(2) The Bank shall, before suspending or cancelling a licence, in accordance with sub-section (1), give written notice, in the prescribed manner and form, to the financial service provider, of its intention to suspend or cancel the licence and shall—
(a) give reasons for the intended suspension or cancellation; and
(b) require the licensee to show cause, within a period of 30 days, why the licence should not be suspended or cancelled.
(3) Where a financial service provider takes remedial measures to the satisfaction of the Bank, within the period referred to in sub-section (2), the Bank shall not suspend or cancel the licence.
(4) The Bank shall, in making its final determination on the suspension or cancellation of a licence, consider the submissions made by the financial service provider, in accordance with sub-section (2), and shall consider any remedial measures taken in accordance with sub-section (3).
(5) The Bank may suspend or cancel a licence if the financial service provider, after being notified in accordance with sub-section (2), fails to show cause why the licence should not be suspended or cancelled or does not take any remedial measures to the satisfaction of the Bank within the specified period.
(6) Where a licence has been suspended, in accordance with this section, a financial service provider shall, for the period of the suspension of the licence, cease to be entitled to the rights and benefits conferred in accordance with the licence and this Act.
(7) Where a licence is cancelled, a financial service provider shall—
(a) cease to be entitled to the rights and benefits, conferred in accordance with the licence and this Act, with effect from the date of the cancellation;
(b) surrender to the Bank, each copy of the licence in the possession of the financial service provider; and
(c) take down any licence on display in every place of business of the financial service provider.
(8) The Bank shall, where it suspends or cancels a licence, in accordance with this section—
(a) publish a notice of the suspension or cancellation, in the prescribed manner and form, in the Gazette and in a daily newspaper or other media of general circulation in Zambia; and
(b) take any additional steps necessary to inform the public of the suspension or cancellation of the licence.
(9) A financial service provider whose licence is cancelled shall not, from the date it receives a notice of the cancellation from the Bank—
(a) enter into a new contract relating to the banking business, financial business or provision of financial services; or
(b) renew or vary a contract relating to the banking business, financial business or provision of financial services.
(1) A financial service provider that has lost a licence shall inform the Bank, within seven days of the loss, and apply to the Bank for a duplicate licence, in the prescribed manner and form, and pay the prescribed fee.
(2) A financial service provider whose licence is defaced or damaged shall apply to the Bank for a duplicate licence, in the prescribed manner and form, and pay the prescribed fee.
(3) The Bank shall, where an application made in accordance with sub-section (1) or (2) meets the requirements of this Act, issue a duplicate licence on payment by the applicant of the prescribed fee.
19. Opening branches, subsidiaries and other establishments
(1) A financial service provider shall not open a branch, subsidiary or other establishment without the prior written approval of the Bank.
(2) A financial service provider that intends to open a branch, subsidiary or other establishment shall apply to the Bank for approval in the prescribed manner and form and pay the prescribed fee.
(3) A bank or financial institution shall notify the Bank of its intention to close a branch, within 60 days before the closure.
(4) A financial business shall notify the Bank of its intention to close a branch, within 30 days before the closure.
The Bank shall prescribe the licensing and regulatory requirements for a representative office.
21. Register of financial service providers
(1) The Bank shall establish and maintain a Register of financial service providers in which shall be entered the—
(a) names, addresses and other particulars of the licensees; and
(b) names and particulars of persons whose licences are rejected or cancelled.
(2) The Register shall be open for public inspection during normal operating hours of the Bank.
[S 21(2) subs by s 4 of Act 7 of 2020.]
(3) The Bank may maintain a Register in an electronic form or any other form determined by the Bank.
[S 21(3) ins by s 4 of Act 7 of 2020.]
22. Publication of financial service providers
The Registrar shall publish, annually, in the Gazette—
(a) the licences issued to, and the names of, the financial service providers; and
(b) a list of licences suspended or cancelled in accordance with this Act.
23. Appointment of Registrar and Deputy Registrars
(1) The Bank shall, in writing, and subject to such terms and conditions as it may determine, appoint a suitably qualified officer of the Bank as Registrar.
(2) The Bank may designate officers of the Bank as Deputy Registrars who shall be subject to the control and direction of the Registrar and shall exercise the powers and perform the functions directed or delegated by the Registrar.
(3) The Registrar and Deputy Registrars, specified in sub-sections (1) and (2), shall each hold office for a period of five years and shall be eligible for re-appointment for a further period of five years.
The Bank may authorise a financial service provider to provide banking and financial services without relying on physical branches in order to promote accessibility by unserved areas to banking and financial services.
PART III
OWNERSHIP AND CONTROL OF FINANCIAL SERVICE PROVIDERS
(1) Subject to sub-section (2), a person shall not without prior approval of the Bank, in writing—
(a) acquire any beneficial interest in the voting shares of a financial service provider; or
(b) enter into any voting arrangement or other agreement that would enable that person or another person to control more than 25 per cent of the total votes that could be cast at a meeting of the financial service provider.
(2) Subject to section 27(3), where a person intends to—
(a) acquire beneficial interest in the voting shares of a financial service provider; or
(b) enter into a voting arrangement trust or other agreement,
that would enable that person to control more than 25 per cent of the total votes that may be cast on a resolution at a meeting of the financial service provider, the financial service provider shall obtain the prior written approval of the Bank.
(3) Where a financial service provider referred to in sub-section (1) is publicly traded, the financial service provider shall notify the Bank as soon as it becomes aware that a person has become a significant shareholder in the financial service provider.
(4) The Bank shall, within 60 days of receipt of a request for approval as specified in sub-section (2), grant or reject the request.
(5) Where the Bank rejects a request for approval, made in accordance with sub-section (2), the Bank shall inform the requester, in writing, of the reasons for the rejection within 14 days of such rejection.
(6) Sub-section (1) does not apply to a company which has more than 51 per cent of its shares publicly traded on a securities exchange, whether within Zambia or outside Zambia, acceptable to the Bank.
(7) Despite sub-section (1), the Bank may prescribe a different limit of voting control for financial businesses.
(8) The Bank may suspend the exercise of voting rights that are in excess of the limit of voting control specified in sub-section (1) or prescribed in accordance with sub-section (7).
(9) A beneficial owner shall, in person or by proxy, exercise only the voting rights on a voting share that is registered, in the name of the beneficial owner, on the share register of a financial service provider.
(10) A person that contravenes this section commits an offence and is liable, upon conviction, to a fine not exceeding four hundred thousand penalty units or to imprisonment for a term not exceeding four years, or to both.
(1) Where a financial service provider contravenes section 25, the Bank shall, on receiving notification, from any person, of the contravention, direct the financial service provider, in the prescribed manner and form, to dispose of the beneficial interest in the voting shares or terminate or modify the voting trust or other arrangement to reduce the person’s control to the extent permissible by or in accordance with this Act.
(2) A financial service provider directed to dispose of a beneficial interest in voting shares, or terminate or modify the voting trust or other arrangement, shall do so within 30 days of receiving the direction from the Bank.
(3) The Bank may, for purposes of ensuring compliance with sub-section (1), direct a financial service provider to submit to the Bank a plan of action with regard to the reduction of control and the Bank may give directions, in writing, for the implementation of the plan.
(1) A beneficial owner shall not own shares in the capital of, or acquire or maintain control in, more than one financial service provider, without the prior written approval of the Bank.
(2) A nominee may hold shares in a financial service provider only if the beneficial owner is identifiable and complies with this Act.
(3) A beneficial owner shall not transfer to another person any shares or other form of ownership in a financial service provider that constitutes a significant shareholding, without the prior written approval of the Bank.
(4) This section does not prevent a person from acquiring all the voting shares in the capital of a financial service provider for the purpose of implementing a corporate restructuring transaction in accordance with this Act, except that the person shall comply with section 25 at the completion of the corporate restructuring transaction.
(5) A request for the written approval of the Bank, made for purposes of this section, shall be made in the prescribed manner and form.
(6) A beneficial owner of the shares of a financial service provider shall not charge, use as collateral or encumber those shares.
(7) A person that contravenes this section commits an offence and is liable, upon conviction, to a fine not exceeding four hundred thousand penalty units or to imprisonment for a term not exceeding four years, or to both.
28. Prohibition of ownership of shares by trusts
A trust or person that controls another person’s property or money under an arrangement or agreement, shall not own shares in a financial service provider, unless the beneficial owner and persons that control the trust, arrangement or agreement are identifiable and comply with this Act and any other relevant written law.
29. Corporate restructuring transactions
(1) Subject to section 30, a financial service provider may effect a corporate restructuring transaction with another company, that is not a financial service provider, if the transaction is in furtherance of the business of the financial service provider.
(2) A bank or financial institution may effect a corporate restructuring transaction with a financial business if the restructured company shall be a bank or financial institution.
30. Requirements for corporate restructuring transaction
(1) Despite any other written law, a financial service provider shall not effect a corporate restructuring transaction without the prior written approval of the Bank.
(2) A financial service provider shall apply, in the prescribed manner and form, to the Bank for approval to effect a corporate restructuring transaction, in accordance with section 29, specifying—
(a) the name of each financial service provider or company involved in the proposed corporate restructuring transaction;
(b) a statement of the nature of the transaction proposed to be entered into;
(c) the material documents intended to evidence or implement the corporate restructuring transaction; and
(d) such other information as the Bank may require.
(3) The Bank shall, in considering an application for approval of a corporate restructuring transaction, have regard to the—
(a) capital adequacy of each applicant in relation to the transaction;
(b) general financial condition, resources and history of each applicant;
(c) character and experience of the directors and persons concerned in the management of the company concerned;
(d) prospects of profitability of the company’s operation, if the transaction is approved;
(e) probable effect of the transaction on competition in the financial sector;
(f) requirements of the Competition and Consumer Protection Act; and
(g) transparency of the legal, financial, operational, managerial, governance and ownership structure of the proposed restructured financial service provider.
(4) The Bank shall, where it grants approval for a corporate restructuring transaction, specify a date on which the corporate restructuring transaction shall take effect.
(5) The Bank shall, where it rejects an application for approval for a corporate restructuring transaction, inform the applicant within seven days of the decision and give reasons for the rejection.
31. Effect of corporate restructuring transaction
(1) In this section—
"new entity" means a financial service provider formed by a corporate restructuring transaction; and
"old entity" means the financial service provider existing prior to the corporate restructuring transaction.
(2) Where a corporate restructuring transaction takes effect in accordance with this Act—
(a) the assets and liabilities of the old entity or, in the case of a transfer of assets and liabilities, the assets and liabilities agreed to be transferred, shall vest in the new entity;
(b) the new entity shall submit a written statement to the Bank, confirming that the assets and liabilities of the old entity have been transferred in accordance with the approved restructuring proposal;
(c) the new entity shall have the same rights and be subject to the same obligations as were, immediately before the transaction took effect, binding on the old entity or, in the case of a transfer of assets and liabilities, the same rights and obligations as were applicable to the old entity with respect to the assets and liabilities so transferred;
(d) the agreements, appointments, transactions and documents relating to transactions of the old entity, that were valid immediately before the corporate restructuring transaction took effect, shall continue to be valid and shall be deemed to have been entered into with the new entity; and
(e) a mortgage, bond, pledge, guarantee or other instrument relating to the corporate restructuring transaction given to secure past, present and future advances, facilities or services by the old entity, shall be deemed to be a mortgage, bond, pledge, guarantee or instrument given to, or in favour of, the new entity.
(3) The Registrar of Companies and a Registrar of Lands and Deeds shall make endorsements and alterations in the respective registers, so as to record the transfer of the property and any rights or liabilities in the property arising from a corporate restructuring transaction where the Registrar of Companies and the Registrar of Lands and Deeds are satisfied that—
(a) the Bank has approved the corporate restructuring transaction; and
(b) the transaction has been duly effected through a deed, instrument, mortgage or other document.
(4) This section does not affect the rights of any creditor, except to the extent specified in this section and the documents relating to the corporate restructuring transaction.
PART IV
CORPORATE GOVERNANCE
32. Responsibilities of Directors
(1) A board shall be responsible for the duties and functions specified in the Companies Act, and this Act.
(2) A board shall perform the following functions—
(a) formulation of policies for the financial service provider;
(b) ensuring corporate governance and business performance of the financial service provider;
(c) directing the affairs and business operations of the financial service provider;
(d) ensuring that the business of the financial service provider is carried on in compliance with all applicable laws and regulations and is conducive to safe and sound practices;
(e) constituting committees of the board as prescribed;
(f) reporting to the shareholders, at an annual general meeting, on the internal controls and systems and information management systems of the financial service provider;
(g) reporting to the Bank on any material changes in the activities, structure and condition of the financial service provider; and
(h) reporting to the Bank on matters that may affect the suitability of shareholders, directors and senior managers.
(1) Despite the provisions of this Act, the Companies Act, or the articles of association, the Bank may—
(a) direct a board to meet within three days at such place in Zambia as the directive shall specify;
(b) request a board to consider and decide on such items relating to the financial service provider as the Bank may direct; and
(c) appoint an observer to a meeting of a board concerned in accordance with this section.
(2) Where a meeting is convened, in accordance with sub-section (1)(a)—
(a) the quorum for the meeting shall be three directors or one-third of the total number of directors, whichever is the greater;
(b) decisions shall be taken by a simple majority of the directors present; and
(c) any decision taken in accordance with paragraph (b) shall be binding on the financial service provider.
(3) The Bank shall, where a board fails to convene a meeting as directed by the Bank in accordance with sub-section (1), take appropriate action to safeguard the integrity of the financial system, the interests of the financial service provider and its customers.
34. Qualifications of directors, chief executive officers, chief financial officers
(1) A person shall not be elected or appointed as a director, chief executive officer or chief financial officer of a financial service provider without the prior written approval of the Bank.
(2) Despite anything to the contrary in the Companies Act, or any other written law, a person is not qualified for election or appointment as a director or senior officer if that person—
(a) is not a fit and proper person to hold the relevant office in accordance with this Act;
(b) is below the age of 21 years;
(c) has been adjudged bankrupt by a competent court or has made an arrangement or composition with that person’s creditors, in Zambia or elsewhere;
(d) has been convicted of an offence involving fraud or dishonesty;
(e) has a mental disability that makes the person incapable of performing the functions of the office;
(f) has been suspended or removed from office in accordance with this Act;
(g) has been a director, member, chief executive officer, chief financial officer, manager or senior officer of a company that has—
(i) been adjudged insolvent;
(ii) entered into a composition with creditors; or
(iii) gone into liquidation or has entered into any other arrangement with creditors in Zambia or elsewhere;
(h) has been removed by a competent court, in Zambia or elsewhere, from an office of trust on account of misconduct or breach of that trust; or
(i) is an expatriate who does not meet such additional requirements as the Bank may prescribe by rules issued in accordance with this Act.
(3) A person shall not be a director of more than one financial service provider without the prior written approval of the Bank.
(4) A person who is a director or senior officer in a financial service provider, whose licence is cancelled in accordance with this Act, shall not, without the prior written approval of the Bank, be elected or appointed as a director or senior officer of another financial service provider.
(5) A person that contravenes this section commits an offence and is liable, upon conviction, to a fine not exceeding four hundred thousand penalty units or to imprisonment for a term not exceeding four years, or to both.
35. Non-executive directors to be in majority
(1) A board of a bank or financial institution may be constituted of executive and non-executive directors, except that the non-executive directors shall be in the majority.
(2) The Minister may, on the recommendation of the Bank, by statutory instrument, provide for the application of sub-section (1) to a financial business.
36. Reporting obligations of Board and directors
(1) The Board and each director individually shall immediately report in writing to the Bank if they have reason to believe that the financial service provider—
(a) may not be able to conduct its business as a going concern;
(b) appears to be or is likely in the near future to be unable to meet all or any of its obligations as they fall due; and
(c) does not or may not be able to meet its capital requirements as prescribed in this Act.
(2) Where the Board or a director fails, omits or neglects to report to the Bank any matter required to be reported under sub-section (1), the Bank may suspend or remove the Board or director.
(3) Subject to section 165, a person who contravenes sub-section (1) commits an offence and is liable upon conviction, to a fine not exceeding two hundred thousand penalty units or to imprisonment for a term not exceeding two years, or to both.
37. Conduct of directors, chief executive officers, chief financial officers and managers
(1) A director, chief executive officer, chief financial officer or manager concerned in the management of a financial service provider, in exercising the powers and discharging the duties of office, shall ensure compliance with this Act, regulations and regulatory statements of the Bank.
(2) A person who contravenes sub-section (1) commits an offence and is liable, upon conviction, to a fine not exceeding two hundred thousand penalty units or to imprisonment for a term not exceeding two years, or to both.
(1) A director shall declare, annually, in writing, to the board the names and addresses of the director’s associates and the material interests of the director.
(2) A director or senior officer who—
(a) is a party to, or has a direct or indirect interest in, a contract or proposed contract with the financial service provider or in the granting of an advance by the financial service provider; or
(b) has a material relationship with a party or prospective party to a contract or a proposed contract with the financial service provider,
shall disclose, in writing, to the financial service provider, the nature and extent of the relationship.
(3) A disclosure of interest, to be made in accordance with this section, shall be made at a meeting of the board at which the question of entering into the contract or granting the advance is first considered, or if the director or senior officer is not, at the date of that meeting, interested in the proposed contract or advance, at a board meeting held immediately after the director or senior officer becomes interested.
(4) A director or senior officer with an interest or material relationship with a party to a contract, shall not participate in a meeting of the board at which the contract concerned is discussed and the director shall refrain from voting on any matter related to the contract, except that a departure of a director from the meeting, shall not disqualify the director for purposes of constituting a quorum.
(5) A director or senior officer shall not be required to make a declaration or give a notice in person, at a meeting of the board, if the director or senior officer delivers the notice and disclosure of interest to each director, at least seven days before the meeting.
(6) A director or senior officer who fails to comply with this section commits an offence and is liable, upon conviction, to a fine not exceeding seven thousand penalty units for each day that the offence continues.
(7) Where a director or senior officer fails to disclose an interest or material relationship as specified in this section, the Court may, on the application of a financial service provider, shareholder or the Bank—
(a) set aside the contract on such terms as it may determine; and
(b) suspend the director or senior officer from office.
(8) For purposes of this section—
(a) persons have a material relationship if they are associated persons or a transaction relates to or is connected with the wealth, business or family interests of the person; or
(b) a person has a material interest in an entity where the person owns, directly or indirectly, more than 10 per cent of any class of voting shares or is a director, proprietor or partner in the entity.
39. False statement and obstruction of examinations
(1) A director, senior officer, or other employee, agent, accountant or adviser of a financial service provider shall not—
(a) negligently or with intent to deceive, make a false or misleading statement or entry or omit to make a statement or entry in any book, account, report or statement of the financial service provider; or
(b) obstruct or attempt to obstruct—
(i) the proper performance by an auditor of the auditor’s duties in accordance with this Act, the Companies Act, or any other relevant law; or
(ii) a lawful inspection of the financial service provider by a duly authorised inspector appointed by the Bank.
(2) A person who contravenes sub-section (1) commits an offence and is liable, upon conviction, to a fine not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding one year, or to both.
40. Suspension or dismissal of directors and senior officers by Bank and removal of shareholders
(1) The Bank may, by order in writing, suspend from office for a period not exceeding six months, a director or senior officer who fails to take reasonable steps to secure compliance by the financial service provider with the requirements of the Act, regulations, rules or regulatory statements made in accordance with this Act or any other relevant written law.
(2) The Bank may, at any time before the expiry of the period referred to in sub-section (1), apply to the Court for an order extending the suspension on good cause shown or an order dismissing a director or senior officer and the Court may, by order—
(a) suspend from office the director or senior officer concerned for such period as it considers appropriate in the circumstances; or
(b) dismiss the director or senior officer from office.
(3) A director or senior officer who performs the functions of office during the period of suspension, or after being dismissed from office, commits an offence and is liable, upon conviction, to a fine not exceeding three hundred thousand penalty units or imprisonment for a term not exceeding three years, or to both.
(4) A significant shareholder shall cease to be a shareholder in a financial service provider if the Bank determines, on evidential grounds, that the significant shareholder is not a fit and proper person to continue holding shares in financial service provider.
(5) The Bank shall, upon application to the Court, dispose of any shareholding interest, of any person that ceases to be a shareholder in accordance with sub-section (4), in a manner and to persons ordered by the Court, subject to the payment of compensation, where applicable.
41. Fit and proper requirements
(1) The Bank may prescribe fit and proper requirements for a shareholder, director or senior officer, which may include criteria relating to—
(a) probity, personal integrity and reputation;
(b) competency and capability; and
(c) financial integrity.
(2) The Bank may remove a shareholder, director or senior officer from office, if it considers that the person, on evidential grounds, has breached the requirements prescribed in sub-section (1).
(1) The Bank shall, by rules issued in accordance with this Act, prescribe the contents of a corporate governance charter to be adopted by a financial service provider.
(2) A board shall develop its own corporate governance charter based on the contents prescribed in accordance with sub-section (1).
(3) The Bank shall, by rules issued in accordance with this Act, prescribe—
(a) the number of directors to be appointed for a board of a bank or financial institution;
(b) the number and type of committees of a board to be constituted and their functions;
(c) mandatory conditions under which a senior officer or other employee concerned with the management or financial affairs of a financial service provider shall be removed from office by a board; and
(d) the reporting requirements relating to compliance of this Act, the Companies Act, and rules and regulations issued in accordance with this Act.
PART V
BUSINESS OPERATIONS
43. Principal administrative office
(1) A financial service provider shall establish and maintain a principal administrative office in Zambia and shall inform the Bank, in the prescribed manner and form, of the location of the principal administrative office.
(2) A financial service provider shall not change the location of its principal administrative office without the prior written approval of the Bank.
(3) A financial service provider that intends to change the location of its principal administrative office shall, in the prescribed manner and form, and at least 60 days before the proposed change, apply to the Bank for the approval of the proposed change.
(4) The Bank shall, when considering an application made in accordance with sub-section (3), take into consideration the suitability of the proposed location.
(5) Where the Bank rejects an application made in accordance with sub-section (3), the Bank shall inform the financial service provider, in writing, within seven days of making the decision and give reasons for the rejection.
44. Use and alteration of name
(1) A financial service provider shall use its name—
(a) on letterheads, correspondence, official documents, advertisements or other communication published or issued by the financial service provider; and
(b) in written contracts to which a financial service provider is a party.
(2) A financial service provider shall not, without the prior written approval of the Bank, alter its name or use or refer to itself for any business purpose by any other name or an abbreviation of the name.
(3) A financial service provider may, with the written approval of the Bank, use its name with the name of a business or undertaking with which it has had a corporate restructuring transaction or, in the case of a change of name, by the subsequent name registered.
(1) A financial service provider shall remain open for business with the public during the hours prescribed by the Bank or such other hours as the Bank may authorise.
(2) The Bank may, on application by a financial service provider, authorise the financial service provider to be closed on any business day subject to such terms and conditions as the Bank may determine.
(1) The Minister may, on the recommendation of the Bank, by statutory instrument, prescribe a bank holiday.
(2) Where an obligation to be discharged by a bank or financial institution falls on a bank holiday, it shall be discharged on the next business day following the bank holiday.
(3) In this section, "bank holiday" means a day on which a bank or financial institution, except a bank’s or financial institution’s branch at an airport or border post, is not open for business with the public, whether or not that day is a public holiday.
47. Records to be registered and maintained
(1) A financial service provider shall prepare and maintain records which shall contain—
(a) the articles of association and amendments to the articles of association;
(b) a register of shareholders and the number of shares registered in the name of each shareholder;
(c) the minutes of meetings and resolutions of the board;
(d) the minutes of meetings and resolutions of the shareholders;
(e) the business correspondence, with supporting accounting records, showing the state of its business affairs and transactions and the financial position of the financial service provider;
(f) for each customer of the financial service provider, records showing, particulars of transactions with, or for the account of, the customer and the balance owing to or by the customer on a daily basis; and
(g) such other records required to be prepared and maintained in accordance with this Act or as may be prescribed by the Bank.
(2) The records, referred to in sub-section (1)(a), (b), (c), (d) and (e) shall be kept and maintained at the principal administrative office of the financial service provider.
(3) The records, referred to in sub-section (1), shall be open for inspection at reasonable times by—
(a) the directors; and
(b) except for records specified in sub-section (1)(c) and (f), the shareholders and creditors, or their personal representatives, as provided in this Act and any other relevant law.
(1) A financial service provider shall cause to be established and maintained, at the principal administrative office, credit documentation and other information relating to the business of the financial service provider with customers and other persons, as the Bank may determine.
(2) In this section, "credit documentation" means the following documents attaching or relating to a contract entered into by a financial service provider with any other person for the provision of a banking or financial service or in respect of a banking or financial service performed or to be performed by the financial service provider—
(a) the current financial statements showing indebtedness of a borrower to the financial service provider and where the debt is guaranteed, the details of the guarantor;
(b) a description of the collateral over which the financial service provider has a mortgage or charge as security for the settlement of a credit facility;
(c) a statement of the terms of the credit, including the principal amount, rate of interest, schedule of repayments and the borrower’s objective or purpose for borrowing; and
(d) documents evidencing the assessment and approval of the credit facility by the financial service provider.
A register or record that a financial service provider is required to establish and maintain in accordance with this Act shall be—
(a) bound in looseleaf or photographic film form;
(b) entered or recorded by any system of mechanical or electronic data processing or any other device or process capable of reproducing the information in intelligible written form within a reasonable time; and
(c) if kept in any one form, be capable of conversion to any other form.
(1) A financial service provider shall retain a register or record for a period of 10 years.
(2) The Bank may require a financial service provider to retain records for a longer period than specified in sub-section (1).
(1) A financial service provider shall, with respect to a register or record—
(a) prevent loss or unauthorised destruction;
(b) prevent falsification of entries;
(c) facilitate the detection and correction of inaccuracies; and
(d) prevent the use or access of information by an unauthorised person.
(2) A financial service provider may destroy a register or record, kept in accordance with this Act, at any time after the register or record has been converted to another form.
(3) A person shall not—
(a) destroy, alter, mutilate or falsify any book, document, valuable security or account, which belongs to a financial service provider or customer, or any entry in such a book, document, or account, or be privy to any such act;
(b) make or be privy to the making of a false entry in a book, document or account; or
(c) omit or be privy to an omission of a material particular from a book, document or account.
(4) A person who contravenes sub-section (3) commits an offence and is liable, upon conviction, to a fine not exceeding two hundred thousand penalty units or to imprisonment for a term not exceeding two years, or to both.
PART VI
REGULATORY AND SUPERVISORY POWER BANK
[Heading subs by s 5 of Act 7 of 2020.]
52. Minimum capital requirements
(1) The Bank shall prescribe the minimum paid-up capital, minimum common equity tier one, minimum primary capital and minimum regulatory capital requirements for financial service providers.
(2) A financial service provider shall compute its regulatory capital in the manner prescribed by the Bank.
(3) A financial service provider shall commence operations with the minimum paid-up capital prescribed by the Bank.
(4) A financial service provider shall maintain the minimum common equity tier one, primary capital and regulatory capital ratios prescribed by the Bank.
(5) Despite sub-section (4), the Bank may require a bank or financial institution to maintain common equity tier one and primary and regulatory capital ratios, in excess of the prescribed amounts, where a bank or financial institution—
(a) has been operating for less than three years;
(b) has been or is expected to have losses resulting in capital deficiencies;
(c) has significant exposure to risk, whether credit, concentration of credit, interest risk, liquidity, operational or any other serious weaknesses in the quality of its assets or earnings;
(d) has a high or severe volume of poor quality assets;
(e) is growing rapidly, internally or through acquisitions;
(f) may be adversely affected by the activities or conditions of its holding company, subsidiary or associates;
(g) has deficiencies in its ownership or management, shareholding structure, composition, qualifications of its directors or senior officers or risk management policies and procedures; or
(h) may be adversely exposed in any other circumstance determined or prescribed by the Bank.
(6) A financial service provider shall not issue any share in its capital or other security other than a bonus share or a share in lieu of dividend or other prescribed security unless it receives the full face value thereof in Zambian Kwacha.
53. Capital conservation buffer
(1) A financial service provider shall build up a capital conservation buffer.
(2) The capital conservation buffer shall be in the form of common equity tier one as prescribed by the Bank.
(3) The Bank may prescribe different buffer requirements for different categories of financial service providers.
(4) A financial service provider shall not declare, credit or pay any dividends, or make other discretionary payments or make any transfer from retained earnings, if doing so would result in failure to provide for, or maintain, the required capital conservation buffer.
54. Counter cyclical capital buffer
(1) Subject to sub-section (3), the Bank may require banks and financial institutions to maintain a counter cyclical capital buffer in their risk weighted assets and forms of common equity capital tier one.
(2) Where the Bank adjusts the counter cyclical capital buffer, the Bank shall announce the decision at least 30 days in advance of the effective date, except that a decision to decrease the level of the counter cyclical capital buffer shall take effect immediately.
(3) A counter cyclical capital buffer shall not be required where the Bank determines that the capital released shall help to absorb losses in a bank or financial institution that pose a risk to financial stability.
55. Restriction on payment of dividends
(1) A bank or financial institution that intends to declare a dividend shall apply to the Bank, for approval of the amount proposed to be declared.
(2) The Bank may, having regard to the impact on the capital adequacy, capital conservation buffer and the risk profile of the applicant—
(a) approve the amount of dividend intended to be declared;
(b) approve a reduced amount of dividend; or
(c) prohibit the payment of any dividend.
The Bank may require banks and financial institutions to maintain common equity tier one, to total on and off balance sheet assets, at a ratio prescribed by the Bank.
(1) A bank or financial institution shall maintain adequate and appropriate forms of liquidity as prescribed by the Bank.
(2) A bank or financial institution shall not—
(a) hold liquid assets, within the bank or financial institution, of less than the percentage level or proportion prescribed by the Bank; or
(b) grant or permit, for the period during which liquid assets are less than the percentage level or proportion prescribed by the Bank, an increase in its outstanding loans, overdrafts or investments.
(3) A bank or financial institution shall, within seven days from the date of a request on the liquidity position of the bank or financial institution by the Bank, provide the information to the Bank.
(4) The Bank may impose, on a bank or financial institution that fails to comply with this section, an administrative penalty on the amount of deficiency, at a rate of two or more percentage points above the annual interest rate prevailing in the most recent 91 day treasury bill auction.
58. Constraints on contracts with associated person
(1) A financial service provider may enter into a contract with an associated person if the—
(a) board approves the contract in advance, and the contract is on terms that are not less favourable to the financial service provider than the terms of similar contracts entered into by the financial service provider with persons who are not associated;
(b) contract is for a nominal sum or of a class or type exempted by the Bank from the operation of this section; or
(c) terms of the contract are in conformity with this Act.
59. Examination of financial service providers
(1) The Bank may cause an examination to be made of a financial service provider in order to determine whether the financial service provider is—
(a) in a sound financial condition; and
(b) complying with this Act, and any other relevant written law.
(2) Despite any other written law, the Bank may access the business of a financial service provider and examine—
(a) oral and documented information including information in computers, books, minutes, accounts and vouchers;
(b) cash and securities; and
(c) any other thing in the possession, custody or under the control of a financial service provider or its affiliate.
(3) The Bank shall, after the completion of an examination undertaken in accordance with this section, submit a report on the examination to the chairperson of the board concerned and shall require the—
(a) chairperson of the board to submit the report to a meeting of the board; and
(b) financial service provider to provide satisfactory explanations, in writing, on actions to be taken on the issues raised in the report.
(4) A report submitted by the Bank, in accordance with sub-section (3), shall be confidential and a director, senior officer or other employee of a financial service provider and any person who, by reason of the person’s capacity or office, has access to the report shall not, without the prior written approval of the Bank, while holding that office, or after the termination of employment, communicate the report or any part of the report to any person other than a director, a senior officer or other employee of that financial service provider.
(5) The Bank may, where it determines that an examination undertaken in accordance with this section shows that the business of a financial service provider is conducted in a manner detrimental to the interests of the financial service provider or its shareholders—
(a) require the financial service provider to take such remedial measures as the Bank may direct; or
(b) appoint a person who is competent to advise the financial service provider on the necessary remedial measures to be taken in accordance with paragraph (a).
(6) A person who, in good faith, provides information or facilitates an examination of a financial service provider, in compliance with this section, shall be indemnified against any claim or sanction as a consequence of such action.
(7) A person who contravenes sub-section (3), (4) or (5) commits an offence is liable, upon conviction, to a fine not exceeding one hundred thousand penalty units, or to imprisonment for a term not exceeding one year, or to both.
(1) A bank or financial institution shall deliver to the Bank, in the form and within the period prescribed by the Bank—
(a) a statement showing assets and liabilities as at the close of the last business day of that month;
(b) the amount of its regulatory capital and reserve funds and the ratio that the amount of its liabilities to the public bears to the amount of its regulatory capital and reserve funds;
(c) a statement showing the loans that are performing;
(d) a statement showing the loans that are nonperforming, loans that have been restructured including the terms of restructuring as the case may be; and
(e) such other statements, further details or evidence concerning its operations, financial condition and resources as may be prescribed by the Bank.
(2) The Bank may require a financial business to provide periodic reports showing information on its operations, financial condition and resources as the Bank may prescribe.
(1) The Bank shall, where it considers it necessary for the safety and soundness of the financial service provider, safety of depositors, or to determine whether this Act is being complied with, require, in writing, an affiliate, associate, holding or subsidiary company, or a person that controls the financial service provider, to provide the Bank or its appointed agent such information or documents as may be necessary, including the financial statements and other financial records of that affiliate, associate, holding or subsidiary company or person in control, within the period specified in the notice.
(2) The Bank may appoint a competent person to undertake an examination of the operations and affairs of an affiliate, associate, holding or subsidiary company of a financial service provider or any person that controls a financial service provider, in order to determine whether the operations and affairs of the affiliate, associate, holding or subsidiary company or the person in control are detrimental to the safety and soundness of the financial service provider.
(3) A person who fails, refuses, omits or neglects to provide information requested in sub-section (1) or (2) commits an offence is liable, upon conviction, for each day during which the contravention continues, to a fine not exceeding two hundred thousand penalty units or to imprisonment for a term not exceeding two years, or to both.
(4) A significant shareholder or director who fails, refuses, omits or neglects to provide information requested for in accordance with sub-section (1) or (2) or is a party to the failure, refusal, omission or neglect, ceases to be a fit and proper person and shall not be or remain a significant shareholder or director in the financial service provider.
62. Affiliates and cross-border supervision
(1) The Bank may exercise its authority over an affiliate of a financial service provider where the Bank determines that it is necessary to implement supervision on a consolidated basis or to effectively supervise the financial service provider and the risks to which it is subjected.
(2) The Bank may, in order to ensure effective supervision of a financial service provider that operates both within and outside Zambia, enter into arrangements for sharing supervisory information on a reciprocal basis with the competent supervisory authorities outside Zambia.
62A. Anti-money laundering and counter financing of terrorism supervision
The Bank may exercise its authority over a financial service provider where the Bank considers that it is necessary to implement supervision for the purposes of the prevention and combating of money laundering and financing of terrorism or proliferation or any other serious offence.
[S 62A ins by s 6 of Act 7 of 2020.]
63. Unsafe and unsound practices
(1) The Bank may prescribe conduct or actions which constitute unsafe or unsound practices.
(2) Where the Bank determines that a financial service provider is committing or pursuing an act or course of conduct that is unsafe or unsound, the Bank may enter into a written agreement, within the time, form and content as directed by the Bank, with the financial service provider or its board to establish a programme of action to counteract the unsafe or unsound practice and to establish or maintain safe and sound practices in the conduct of the business of the financial service provider.
(3) Where the Bank is unable to agree with a financial service provider, as provided in sub-section (2), or where the Bank considers that the need for prompt action makes the negotiating of an agreement impractical, the Bank may direct the financial service provider, board or chief executive officer to cease or refrain from doing the act, pursuing the course of conduct or performing any act to rectify the situation.
(4) The Bank may, where it determines that a financial service provider is committing or pursuing an act or course of conduct that is unsafe or unsound—
(a) direct the financial service provider to refrain from adopting or pursuing a particular course of action or to restrict the scope of its business in a particular way;
(b) impose a limitation on the bank’s acceptance of deposits, payment of interest on deposits, granting of credit, making of investments or payment of dividends;
(c) prohibit the bank or financial institution from soliciting deposits or paying interest on deposits made by or from specified persons or classes of persons;
(d) prohibit the financial service provider from entering into any other transaction or class of transactions or from commencing or continuing an activity that it is permitted in this Act; or
(e) require the suspension or removal from office of any director, senior officer or other person.
(5) A direction given in accordance with this section shall be given by written notice to the financial service provider or person concerned and may in like manner be varied or revoked.
(6) A direction given, in accordance with this section, shall be effective immediately and shall remain in effect in accordance with its terms unless discontinued on appeal.
(7) A person acting in contravention of an agreement made, or direction given, in accordance with this section, commits an offence and is liable, upon conviction, to a penalty not exceeding five hundred thousand penalty units or to imprisonment for a term not exceeding five years, or to both.
(8) A person who carries out any unsafe or unsound practice, contrary to the provisions of this Act or rules issued in accordance with this Act, commits an offence and is liable, upon conviction, to a fine not exceeding three hundred thousand penalty units or to imprisonment for a term not exceeding three years, or to both.
(1) The Bank shall take supervisory action against a financial service provider where—
(a) the financial service provider fails to comply with this Act and any rule or regulatory statement issued in accordance with this Act or any other applicable law;
(b) the financial service provider refuses to permit an examination or obstructs an examination from being made as provided in or in accordance with this Act;
(c) an examination instituted in accordance with this Act shows that a financial service provider—
(i) conducts business in breach of any relevant written law or engages in conduct that is unsafe or unsound;
(ii) is unable, or is likely to become unable, to continue its operations in the ordinary course of its business;
(iii) has capital which is less than the prescribed minimum; or
(iv) is insolvent.
(2) Without prejudice to any other course of action taken by the Bank, the supervisory action that the Bank may take as specified in sub-section (1), includes—
(a) making directions, in writing, that the financial service provider takes remedial action to comply with any rule or regulatory statement;
(b) issuing a regulatory statement or measures to be taken to improve the management, financial soundness or business methods of a financial service provider;
(c) requiring the board or senior officers to execute an agreement on implementation of a regulatory statement issued in accordance with paragraphs (a) and (b);
(d) performing or appointing an agent to perform a special examination of the financial service provider to determine the financial condition of the financial service provider at the cost of the financial service provider; or
(e) taking possession of a financial service provider.
(3) Where a financial service provider fails, refuses or neglects to comply with a regulatory statement issued or an agreement made, in accordance with sub-section (1), the Bank may do any of the following—
(a) issue a cease and desist order, of temporary or indefinite duration, requiring the financial service provider and its board to—
(i) stop the unsafe or unsound practice;
(ii) limit its lending or borrowing;
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(iii) stop any declaration or payment of dividends; or
(iv) stop any other activity as may be specified by the Bank;
(b) remove or suspend a person from the management of the affairs of the financial service provider;
(c) impose penalties on the offending senior officer, which shall be paid by the senior officer;
(d) appoint a person who, in the consideration of the Bank, is suitably qualified and competent to advise and assist the financial service provider, generally or for the purposes of implementing the orders, regulatory statement or agreement made in accordance with paragraph (a), (b) or (c);
(e) appoint a person who is suitably qualified and competent to manage the affairs of a financial service provider for such period as shall be necessary to rectify the problem;
(f) require the financial service provider to reconstitute its board within such period as shall be specified;
(g) withhold approvals on establishment of new branches;
(h) restrict or vary the financial service provider’s licence;
(i) require the financial service provider to increase its capital to such levels as may be specified; or
(j) impose any administrative penalty as the Bank may consider appropriate in the circumstance.
65. Financial service provider suffering large losses
The Bank shall, where a financial service provider complying with the prescribed capital requirements incurs or is likely to incur large losses within any financial year, take the following actions against the financial service provider—
(a) prohibit the financial service provider from declaring and distributing any dividends that are likely to cause the financial service provider not to comply with the capital requirements prescribed in this Act;
(b) undertake more frequent examinations of the financial service provider; or
(c) require the board or senior officers to provide a written explanation detailing the causes of losses and the measures to be taken by the financial service provider to rectify the position and avert future losses.
66. Undercapitalised financial service provider
(1) Where a financial service provider is undercapitalised, the Bank shall, in addition to the actions specified in section 65, take the following actions against the financial service provider—
(a) order the financial service provider to submit to the Bank, within 30 days of the order, a capital restoration plan to restore the financial service provider to capital adequacy as prescribed in this Act;
(b) require the financial service provider to increase the capital to prescribed levels, within 90 days of submission of the capital restoration plan; and
(c) prohibit the financial service provider from awarding any bonuses or increments in the salary, emoluments and other benefits to directors and senior officers.
(2) The Bank may, in addition to the actions, specified in sub-section (1), appoint a person who is suitably qualified and competent to advise and assist a financial service provider in designing and implementing a capital restoration plan.
(3) A person, appointed in accordance with sub-section (2), shall report to the Bank the progress being made on the capital restoration plan, during such intervals as the Bank may direct.
(4) Where the Bank takes action, in accordance with sub-section (1) or (2), and the financial service provider fails, refuses or neglects to comply, the Bank shall—
(a) prohibit the financial service provider from opening new branches;
(b) impose restrictions on growth of assets or liabilities of the financial service provider as the Bank shall determine;
(c) restrict the rate of interest on savings and time deposits payable by the financial service provider to such rates as the Bank shall specify;
(d) require the financial service provider to remove the senior officers responsible for the non-compliance; or
(e) order the financial service provider to do any or such other things as the Bank may consider necessary to rectify the capital deficiency of the financial service provider.
(5) In this section, a financial service provider shall be considered as undercapitalised if it does not comply fully with any prescribed capital adequacy requirements.
67. Significantly undercapitalised financial service provider
(1) Where a financial service provider is significantly undercapitalised, the Bank shall take any of the following actions against the financial service provider—
(a) any action specified in section 66;
(b) direct the board to rectify its significant undercapitalisation within 90 days and restore capital adequacy within 180 days or within such shorter period as the Bank may direct;
(c) restrict or vary the financial service provider’s licence;
(d) suspend the financial service provider’s licence;
(e) cancel the financial service provider’s licence; or
(f) take possession of the financial service provider.
(2) The Bank shall prescribe what constitutes significantly undercapitalised for the purposes of this section.
(3) The Bank shall, in writing, inform the Minister of the state of affairs of a bank or financial institution in respect of which the Bank has taken supervisory action in accordance with this section.
68. Corrective actions against financial businesses
(1) The Bank may take any of the supervisory actions, specified in this Act, against a financial business where it considers it appropriate and necessary so to do.
(2) The corrective actions, specified in sections 66 and 67, shall take precedence over any discretionary corrective actions available to the Bank as specified in this Act or any other law.
69. Modification, cancellation and upholding of regulatory statement
The Bank may, on representation made by a person, financial service provider or on its own motion, modify, cancel or uphold a regulatory statement issued specifically for or against a financial service provider and, on such modification or cancellation, impose conditions that the Bank considers necessary or appropriate in the matter.
70. Notice of taking possession
When taking possession of a financial service provider, the Bank shall post in each branch of the financial service provider concerned a notice announcing its action and specifying the date, hour and minute at which the possession takes effect and if the taking of possession is pursuant to an insolvency the Bank shall transmit a copy of the notice to the Court.
71. Powers and duties of Bank on taking possession
The Bank shall, on taking possession of a financial service provider, be vested with full and exclusive powers of management and control of the financial service provider and shall have the power to—
(a) dissolve the board;
(b) continue or discontinue any operations;
(c) borrow money, on the security of the assets of the financial service provider or not on such security;
(d) suspend the payment of any obligation, including interest;
(e) employ, re-employ, retain in employment, or terminate the employment of a senior officer, other employee of the financial service provider or professional advisor, where the Bank considers necessary;
(f) execute an instrument in the name of the bank or financial institution and conduct in the name of the bank or financial institution any action or legal proceeding;
(g) terminate the interests of shareholders and refer the determination of the value of the interest to the Court or an arbitrator;
(h) enforce the personal liability of the directors and shareholders of the financial service provider incurred in the ordinary course of business and on unpaid shares; and
(i) take any other appropriate action specified in this Act.
[S 72 rep by s 7 of Act 7 of 2020.]
73. Possession of financial service provider by Bank
The Bank shall, where the Bank takes possession of a financial service provider—
(a) restructure or reorganise the financial service provider;
(b) sell the financial service provider as a going concern;
(c) close the financial service provider;
(d) transfer all or part of the business of the financial service provider to a bridge bank;
(e) initiate a purchase and assumption transaction;
(f) dispose of some of the assets of the financial service provider; or
(g) take an action that the Bank considers necessary to enable the Bank carry out its functions in accordance with this Act.
(2) Where the Bank decides to close a financial service provider under sub-section (1)(c), the closure may take effect—
(a) by an order of the Bank placing the financial service provider under liquidation; or
(b) in the case of a financial business, by cancelling the financial business licence and recommending to an appropriate authority the placing of the financial business into liquidation.
(3) Despite sub-section (1), the Bank shall, on taking possession of a financial service provider, prepare a statement of affairs showing the financial position of the financial service provider.
[S 73 subs by s 8 of Act 7 of 2020.]
[S 74 rep by s 9 of Act 7 of 2020.]
75. Petition to Minister against possession
A financial service provider or an interested person acting on the financial service provider’s behalf may, within 21 days after the date on which the Bank takes possession of the financial service provider, petition the Minister to establish a tribunal to enquire into the decision of the Bank to take possession of the financial service provider.
[S 75 subs by s 10 of Act 7 of 2020.]
(1) Where the Bank takes possession of a financial service provider—
(a) despite the provisions of any other relevant law relating to extension of time, any term, whether statutory or contractual, on the expiration of which a claim or right of the financial service provider would expire or be extinguished, shall be extended by six months from the date of such expiration;
(b) an attachment or lien, except for an attachment or lien existing 12 months prior to the taking possession of the financial service provider, shall be vacated;
(c) an attachment or lien shall not attach to assets or property of the financial service provider during the period that the possession continues, except an attachment or lien created—
(i) by the Bank in carrying out its role of lender of last resort; or
(ii) in favour of a payment system, settlement system or settlement in netting or gross settlement arrangement;
(d) every payment or transfer of an asset or property of the financial service provider made with intent to effect a preference of the recipient over the other creditors of a financial service provider or at less than the appraised book value, shall be void, if made within a period of 12 months before the Bank takes possession of the financial service provider;
(e) a gratuitous transfer of any asset of the financial service provider made within 12 months before the possession by the Bank shall be void and all assets shall be surrendered to the Bank; and
(f) any lending to a senior officer, other employee of the financial service provider, director or any associated person on preferential terms or without adequate security made within six months prior to the possession of the financial service provider may be rescinded and that senior officer, other employee of the financial service provider or associated person shall immediately refund the moneys advanced and interest accrued, at the prevailing rate at the time of possession, to the financial service provider.
(2) Where a payment or transfer, referred to in sub-section (1)(d), has the effect of preferring the recipient, it shall be presumed to have been made with that intent, except in the case of a—
(a) payment made to a creditor in the ordinary course of business to discharge in whole or in part a debt or other liability of the financial service provider to the creditor; or
(b) transfer of an asset or property made in a current exchange for valuable consideration equal to the fair market value of the asset or property transferred.
77. Restructuring and reorganisation
(1) Where the Bank, acting in accordance with section 73(a) commences a restructuring or reorganisation, or both, of a financial service provider, the Bank shall, after granting a reasonable opportunity for a hearing to all interested parties, develop and send a copy of the restructuring or reorganisation plan to each depositor and any other creditor who, under the plan, would not receive full payment.
(2) A copy of a restructuring or reorganisation plan, specified in sub-section (1), shall be accompanied by a notice stating that the Bank shall proceed to carry out the restructuring or reorganisation, if the plan is not rejected, in writing, within 30 days—
(a) by persons holding at least one-third of the aggregate amount of the deposits;
(b) creditors comprising at least one-third in value of the aggregate of the claims of creditors, other than subordinated creditors; or
(c) if within that period, no objection or appeal to the Court has been made and the Court does not order a stay of proceedings.
78. Refusal of restructuring or reorganisation
Where depositors and other creditors reject a restructuring or reorganisation plan developed by the Bank, in accordance with section 77, or when in the course of a restructuring or reorganisation it appears to the Bank that circumstances render the plan inequitable or its execution impossible or undesirable, the Bank may—
(a) modify the plan; or
(b) order the compulsory liquidation of the financial service provider in accordance with Part X.
79. Restriction on execution of judgment
(1) A writ of execution, attachment, garnishee order or other process of a similar nature shall not be issued or made against the assets or property of a financial service provider which is in the possession of the Bank.
(2) Where a creditor has issued or made a writ of execution or attachment, garnishee order or other process of a similar nature against the movable or immovable property of a financial service provider or has attached a debt due to the financial service provider, the creditor is not entitled to retain the benefit of the execution or attachment, unless the creditor has completed the execution or attachment 12 months before the effective date of the Bank taking possession of the financial service provider.
All necessary and reasonable expenses, costs and charges incurred by the Bank in the application of this Part shall be defrayed from the funds of the financial service provider.
PART VII
RESTRICTIONS ON TRANSACTIONS OF FINANCIAL SERVICE PROVIDERS
(1) A bank or financial institution shall not—
(a) mortgage, charge or grant security to any person over an asset of a bank or financial institution other than—
(i) in the ordinary course of its business; or
(ii) to the Bank in order to secure short term liquidity advances made by the Bank in accordance with the Bank of Zambia Act; or
(b) acquire an asset that is subject to a mortgage, charge or other security interest in favour of any person, except to satisfy a debt or liability to the bank or financial institution.
(2) Despite sub-section (1) a bank or financial institution shall not enter into a lending agreement that authorises the lender to place the bank or financial institution into receivership.
82. Limitations on granting credit facilities
(1) A bank or financial institution shall not, directly or indirectly—
(a) except as the Bank may prescribe, grant a credit facility or guarantee a debt of a person or common enterprise so that the total value of the credit facility and guarantee, in respect of a person or common enterprise, is more than 25 per cent of the regulatory capital of the bank or financial institution;
(b) grant a credit facility against the security of its own shares or of those of a company affiliated to it;
(c) except with the prior written approval of the Bank, and on such terms and conditions as may be prescribed by the Bank, grant or permit to be outstanding any secured or unsecured grants, advances and guarantees which are more than five per cent of common equity tier one capital of the bank or financial institution, to—
(i) its directors, whether such advances are obtained by the directors individually, jointly or severally;
(ii) a person that has control of the bank or financial institution; or
(iii) a body of persons in which one or more of its directors has control or is a director, partner, manager, agent or member; or
(d) grant or permit to be outstanding to a senior officer or other employee of the bank or financial institution, unsecured advances that on aggregate exceed the respective annual remunerations of the senior officer or other employee, except with the prior written approval of the Bank and on such terms and conditions as the Bank may prescribe.
(2) Except as may be prescribed under sub-section (1), the total value of a grant, credit facility and guarantee specified in sub-section (1) shall not exceed 25 per cent of the regulatory capital.
[S 82(2) subs by s 11 of Act 7 of 2020.]
(3) Where the Bank, in imposing the limitations specified in sub-sections (1) and (2), determines that a group of two or more persons to whom a grant, credit facility or guarantee has been or shall be made, is a common enterprise or is so interrelated that the group should be considered as a unit, the Bank may, by notice, direct that the total indebtedness of that group shall be combined and shall be deemed to be the indebtedness of a single person.
(4) A bank or financial institution shall not be considered as having contravened sub-section (1) or (2) by virtue of a determination, made in accordance with sub-section (3), if the bank or the financial institution disposes of the indebtedness of the group to the extent that the indebtedness exceeds the relevant limitation within such reasonable time as the Bank may determine.
A bank or financial institution shall not, directly or indirectly, without the prior written approval of the Bank and on such terms and conditions as may be prescribed, engage in any trade or business for which it is not licensed, except where it is necessary for a period not exceeding 12 months or such longer period as the Bank may allow, to secure any debt due to the bank or financial institution.
84. Restriction on equity investments
(1) A bank or financial institution shall not, directly or indirectly, without the prior written approval of the Bank and on such terms and conditions as may be prescribed, acquire ownership of an interest in a commercial, agricultural, industrial or other business undertaking, except as an interest that is necessary for securing or satisfying a debt or other liability payable to the bank or the financial institution and which is disposed of within two years or subsequently extended with the prior written approval of the Bank.
(2) A bank or financial institution shall not invest in an equity interest in a person, property or undertaking in an amount exceeding 15 per cent of the total of all equity interests in the person, property or undertaking.
(3) The aggregate investment in equity interests of a person, property or undertaking by the bank or financial institution shall not exceed 15 per cent of its primary capital.
(4) A bank or financial institution shall not acquire an equity interest in a person, property or undertaking where the value of the bank or financial institution’s equity exceeds 15 per cent of its primary capital.
(5) A bank or financial institution shall not acquire an equity interest in a person, property or undertaking in which an insider has a related interest that exceeds 10 per cent of the bank or financial institution’s primary capital.
(6) Sub-section (2) does not apply to an investment by a bank or financial institution in the shares of its subsidiary or proposed subsidiary where the—
(a) equity interest in the subsidiary is less than 51 per cent of the total equity interests in the subsidiary; or
(b) aggregate of the equity investments by the bank or financial institution is less than 15 per cent of its primary capital.
(7) Despite sub-section (6), the Bank may approve the holding of more than 51 per cent equity interest in a subsidiary on such terms and conditions as the Bank may determine.
(8) Sub-section (2) does not apply to the acquisition by a bank or financial institution of an equity interest in the realisation of any part of collateral provided to the bank or financial institution in a credit transaction, if the bank or financial institution disposes of equity interest, in excess of the limits imposed by this section, within two years following its acquisition or such longer period as the Bank may determine.
85. Restriction on lease or other interest in real property
(1) A bank or financial institution may acquire an interest in real property if the acquisition is necessary for—
(a) conducting business, making provision for future expansion or providing housing for its senior officers and other employees; or
(b) securing or satisfying a debt or other liability to it, which is disposed of within two years or subsequently continued with the prior written approval of the Bank.
(2) A bank or financial institution shall not, directly or indirectly, without the prior written approval of the Bank and on such terms and conditions as the Bank may prescribe—
(a) purchase, lease or acquire an interest in real property; or
(b) lease or make available any personal property owned by the bank or financial institution in consideration of periodic payments, rent or other instalment payments.
(3) Nothing in this sub-section shall prevent a bank or financial institution from lending and taking title to personal property for the purpose of satisfying a debt or obligation to a bank or financial institution, if the lease or other arrangement is disposed of within two years or subsequently continued with the prior written approval of the Bank.
86. Limits, restrictions and prohibition on financial business and alternative financial services
(1) Subject to this Part, the Bank may adopt, vary or amend the limits, restrictions and prohibitions with regard to the financial business and alternative financial services.
(2) Despite sub-section (1) the Bank may—
(a) establish lending and other limits, impose restrictions and prohibitions on financial businesses and may prescribe different limits for different categories of financial businesses; and
(b) on application by a financial service provider, in the prescribed manner and form, exempt a financial service provider offering alternative financial services from some provisions of this Part, in a prescribed manner and form.
87. Exemption of alternative financial services
The Bank may, on application by a financial service provider, in the prescribed manner and form, exempt that financial service provider offering alternative financial services from some provisions of this Part.
PART VIII
FINANCIAL STATEMENTS AND ACCOUNTABILITY
88. Annual financial statement
(1) A board shall ensure that proper books of account and other records relating to the operations of the financial service provider are kept.
(2) A board shall prepare, for each financial year, financial statements, accounts and reports in accordance with international accounting standards as recognised by the Zambia Institute of Chartered Accountants and rules issued by the Bank in accordance with this Act.
(3) A financial service provider shall, not later than 21 days before the date of an annual general meeting, send to each shareholder and to the Bank a copy of its audited financial statement for the preceding financial year.
(4) A board shall, not more than three months after the close of the financial year, send a copy of the audited financial statements to the Bank, together with any report made by an external auditor, including a management letter or other communication prepared in accordance with internationally accepted standards as specified in sub-section (2).
(5) The Bank may, on receipt of a financial service provider’s audited financial statement, as provided in sub-section (5), direct that a trilateral meeting be held by the Bank with a financial service provider and the external auditor of the financial service provider, subject to the Bank’s supervisory responsibilities that may have arisen in the course of a statutory audit.
(6) Where a financial service provider fails to comply with sub-section (3), the annual general meeting shall be adjourned until such time as the financial service provider complies with the sub-section.
89. Presentation of annual financial statement to shareholders
(1) A board shall present to the shareholders, at an annual general meeting, all statements, reports and information that are required to be presented to shareholders at an annual general meeting as provided in the Companies Act, including—
(a) a directors’ report, containing the following information—
(i) common enterprise and related party transactions;
(ii) risk management processes and practices;
(iii) disclosed directors’ interests; and
(iv) the existence of prohibited borrowings or lendings;
(b) an audited report of its financial statements for the financial year;
(c) a list of subsidiaries, other than subsidiaries acquired on a realisation of security, showing with respect to each subsidiary—
(i) its name and the address of its head or principal office;
(ii) the book value in the aggregate of any shares of the subsidiary that is beneficially owned by the financial service provider and any other subsidiaries of the financial service provider; and
(iii) the percentage of the voting shares of the subsidiary that is beneficially owned by the financial service provider and other subsidiaries of the financial service provider; and
(d) any information that may be provided in this Act or prescribed by the Bank in accordance with this Act or any other written law.
(2) Financial statements and reports, referred to in sub-section (1), shall be a true and accurate representation of the financial service provider’s financial position as at the end of the financial year, including the results of the operations and changes in the financial position of the financial service provider for the financial year.
90. Reserve for bad and doubtful debts
A financial service provider’s annual financial statements shall comply with the regulatory statements, issued in accordance with this Act, for creation or variation of appropriate reserves for bad and doubtful debts.
91. Approval of annual financial statements
(1) A board shall approve the annual financial statements of the financial service provider.
(2) The annual financial statements, approved in accordance with sub-section (1), shall be signed by at least two directors.
92. Publication of annual financial statements
(1) A financial service provider shall publish, in a newspaper of general circulation in Zambia, its quarterly financial statement and audited annual financial statements.
(2) The Bank shall prescribe the manner and form of publication of the financial statements referred to in sub-section (1).
(3) A financial service provider shall display, in a conspicuous place in each branch, at all times when the branch is open for business, a copy of the financial service provider’s quarterly and audited annual financial statements.
93. Appointment of external auditor
(1) A financial service provider shall appoint, at the beginning of each financial year, an external auditor.
(2) An external auditor, appointed in accordance with sub-section (1), shall be a member of the Zambia Institute of Chartered Accountants, and meet such other conditions as the Bank may prescribe.
(3) The Bank shall prescribe term of appointment of an auditor and an engagement partner.
(4) A financial service provider shall pay an external auditor remuneration as agreed with the board.
(5) An external auditor of a financial service provider shall be the external auditor of a subsidiary of the financial service provider.
(6) A person that contravenes this section commits an offence and is liable, upon conviction, to a fine not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding one year, or to both.
(7) The Bank may exempt certain types of financial businesses from the requirements of this section.
94. Responsibilities of external auditor
(1) An external auditor shall audit the financial statements of a financial service provider and make a report to the shareholders of the financial service provider and express an opinion, in accordance with this Act, any other written law and standards promulgated by the Zambia Institute of Chartered Accountants on the—
(a) annual balance sheet, profit and loss account and other financial statements required to be submitted by the financial service provider in accordance with this Act; and
(b) compliance of the financial service provider with the requirements of this Act or other relevant written law, with respect to the accounts.
(2) An external auditor who, in the course of carrying out duties, as specified in sub-section (1), finds that a financial service provider—
(a) is insolvent or is likely to become insolvent; or
(b) has contravened a requirement of this Act, a regulation, rule, guideline or regulatory statement issued in accordance with this Act, or a condition imposed by the financial service provider’s licence,
shall report the finding, in the prescribed manner and form, to the Bank, within 14 days of the finding.
(3) An external auditor that communicates in good faith with the Bank on a matter to which this section applies, is not in breach of a duty owed to a financial service provider.
95. Information by external auditor to Bank
(1) The Bank may, by notice to an external auditor of a financial service provider, whether current or in the past, require the external auditor to provide information about the financial service provider, a subsidiary or an affiliate of the financial service provider.
(2) An external auditor who, being required to provide information as provided in sub-section (1)—
(a) fails, refuses or neglects to provide the information; or
(b) provides false or misleading information;
commits an offence and is liable, upon conviction, to a fine not exceeding one hundred thousand penalty units or to imprisonment for a term not exceeding one year, or to both.
96. Disqualification of external auditor
A financial service provider shall not appoint a person as an external auditor of that financial provider if that person is—
(a) a director, senior officer or other employee of the financial service provider or of any person associated or affiliated with the financial service provider;
(b) an associate of a director or senior officer;
(c) a body corporate; or
(d) a person who personally, or through that person’s partner or employee, regularly performs the duties of secretary or book keeper to the financial service provider.
97. Access to information and auditor’s report
(1) An external auditor of a financial service provider has the right of access to all books, accounts and records of a financial service provider and is entitled to require from its directors, senior officers and agents such information and explanations that the external auditor requires to perform the external auditor’s duties and responsibilities as provided in this Act and any other relevant law.
(2) A report made for the purposes of this Act by an external auditor shall—
(a) express whether, in the external auditor’s opinion, the financial service provider made available all information necessary for the external auditor to comply with the requirements of this Act or other relevant law;
(b) state whether, in the external auditor’s opinion, any of the statements in the annual financial statement—
(i) is fully, fairly and properly drawn up;
(ii) exhibits a true and fair statement of the financial service provider’s financial condition; and
(iii) requires an explanation or information from the board, senior officer or agent of the financial service provider or a satisfactory response has been received;
(c) state whether in the external auditor’s opinion the financial service provider has complied with the provisions, regulations, rules, regulatory statements specified in or under this Act and any other relevant law; and
(d) state the transactions or conditions that have come to the attention of the auditor affecting the well-being of the financial service provider that, in the opinion of the external auditor, are not satisfactory and require rectification including—
(i) any transaction of the financial service provider that has come to the attention of the external auditor and which, in the opinion of the external auditor, has not been within the powers of the financial service provider or which was contrary to this Act or any other law; and
(ii) a nonperforming loan that is outstanding, has been restructured or the terms of repayment have been extended, if the principal amount of the loan is five per cent or more of the regulatory capital of the financial service provider.
(3) A board shall submit a copy of the report of the external auditor, together with a copy of the annual financial statement, to the Bank and each shareholder of the financial service provider, within a period of three months from the end of a financial year.
98. Termination of appointment of external auditor
(1) The Bank may cause the dismissal of an external auditor to a financial service provider for failure to perform duties and responsibilities, in accordance with this Act, or auditing standards approved by the Zambia Institute of Chartered Accountants.
(2) Where an external auditor to a financial service provider is dismissed, in accordance with sub-section (1), the financial service provider shall appoint another external auditor, subject to meeting the conditions prescribed by the Bank.
(3) Where a financial service provider fails to comply with sub-section (2), the Bank shall order the dismissal of the external auditor.
99. Statement on resignation of external auditor
Where an external auditor of a financial service provider resigns, the external auditor shall prepare and deliver to the Bank, a written statement specifying the reasons for the resignation, within 10 days after submission to the financial service provider of the auditor’s resignation.
100. Termination of appointment of external auditor by financial service provider
(1) Where a financial service provider terminates the appointment of an external auditor, the financial service provider shall submit to the Bank and the external auditor, within 10 days of the decision to terminate the appointment, a written statement setting out the reasons for the termination.
(2) An external auditor may, within 10 days of receiving the statement referred to in sub-section (1), submit to the Bank and the financial service provider a written statement responding to the reasons set out by the financial service provider.
PART IX
ANTI-COMPETITIVE ACTIVITIES AND CONSUMER PROTECTION
(1) Subject to sub-section (3), a financial service provider shall not make an agreement or arrangement with another financial service provider with respect to the—
(a) rate of interest to be levied on a deposit;
(b) rate of interest or charge levied on a credit facility;
(c) amount of a charge for the provision of a financial service;
(d) provision of, or refusal to provide, banking or financial services to a person;
(e) division of markets by allocating customers; or
(f) provision of banking or financial services in a manner that restricts competition in the financial sector.
(2) A financial service provider that contravenes sub-section (1) commits an offence and is liable, upon conviction, to a fine not exceeding three hundred thousand penalty units or to imprisonment for a term not exceeding three years, or to both.
(3) Sub-section (1) does not apply to an agreement or arrangement—
(a) for the performance of a banking or financial service by a financial service provider to another;
(b) evidencing a syndication or agreement for the provision of banking or financial services to a person by two or more financial service providers;
(c) for the underwriting or distribution of security by a bank or financial institution or a group of persons, including a financial service provider; or
(d) for the exchange of statistics or audit information, the development and use of systems, forms, methods, procedures and standards, the use of common facilities, joint research and the development or any matter regarding the same.
(1) A financial service provider shall not compel a person to contract for another service with the financial service provider or another person as a condition for receiving a banking or financial service from the financial service provider.
(2) A financial service provider that contravenes sub-section (1) commits an offence and is liable, upon conviction, to a fine not exceeding five hundred thousand penalty units or imprisonment for a term not exceeding five years, or to both.
A financial service provider shall not compel a customer to use the financial service provider’s choice of a supplier of any service or goods.
104. Misconduct during debt collection
(1) A financial service provider shall not harass, oppress or abuse a person in the collection of a debt.
(2) A financial service provider shall not use false, deceptive or misleading representation or means when collecting a debt.
105. Determination of benchmark base rate
The Bank may prescribe the benchmark interest rate that a financial service provider shall charge customers.
106. Disclosure of interest rates and charges
(1) A financial service provider shall, at the time of opening a new account for a customer, provide a customer with a written statement of the—
(a) charges for maintaining, and accessing funds on the account;
(b) interest, if any, to be paid to the customer by the financial service provider; and
(c) manner in which the financial service provider shall inform the customer of new charges or changes in the charges or interest specified.
(2) A financial service provider that agrees to make a loan or credit available to a person shall, before making the loan or credit, disclose the cost of borrowing to the person in writing.
(3) The Minister, in consultation with the Bank, may prescribe the manner and form, and content of information, required to be disclosed by a financial service provider under this section.
107. Increase in service charges
A financial service provider shall, before introducing a new charge, or increasing the rate of an existing charge for retail customers or micro, small and medium scale enterprises, apply for the prior written approval of the Bank.
(1) A financial service provider shall, before advancing a credit facility to a customer, assess and determine the customer’s ability to pay the credit, based on the customer’s current and expected income, current obligations, employment status, other financial resources or assets to be given as security.
(2) A financial service provider shall not advance a credit facility to a customer whose total monthly debts due on outstanding obligations, including amounts under credit facility, exceed a limit prescribed by the Bank.
(3) A financial service provider that contravenes this section commits an offence.
109. Prohibition against penal interest
(1) A financial service provider shall not impose on a borrower a charge or penalty as a result of the failure by the borrower to repay or pay in accordance with the contract governing the loan other than—
(a) interest on an overdue payment on a loan;
(b) legal costs incurred in collecting or attempting to collect a payment on a loan; or
(c) costs, including legal costs, incurred in protecting or realising the security on a loan.
(2) A financial service provider that contravenes sub-section (1) commits an offence.
110. Recoverable amounts on nonperforming loan
(1) A financial service provider shall recover the following amounts from a borrower on a nonperforming credit facility—
(a) the principal amount owing when the credit facility becomes nonperforming;
(b) any interest in arrears due in accordance with the credit facility agreement but not exceeding the principal amount owing when the loan becomes nonperforming; and
(c) expenses incurred in the recovery of amounts owed by the borrower.
(2) This section does not apply to interest awarded in terms of a Court order or judgment and accruing after the making of the order or judgment.
111. Data protection and disclosure of information
Subject to the Financial Intelligence Act, a financial service provider shall maintain the confidentiality of information obtained in the provision of a service to a customer and shall not divulge any information except—
(a) in accordance with the express consent of a customer;
(b) in compliance with a court order;
(c) where the interest of the financial service provider requires disclosure;
(d) where the information requested is customer identification data required by another financial service provider for the purpose of conducting a due diligence; or
(e) where the Bank, in the performance of its functions as provided in this Act, so requests or directs.
112. Prohibition of anti-competitive practice
(1) A financial service provider shall not engage in anti-competitive practices.
(2) A financial service provider that enters into an agreement, or makes a decision or engages into a concerted practice whose objective or effect is to prevent, restrict or distort competition to an appreciable extent in the financial sector shall be considered to have engaged in an unsafe and unsound practice.
113. Complaints procedure for customers
A financial service provider shall—
(a) establish and make available, in writing, to each customer, in the portion of each branch that the public has access to, procedures for dealing with complaints made by a customer;
(b) designate a senior officer or other employee to be a customer service officer responsible for implementing and administering the procedures specified in paragraph (a); and
(c) create and maintain for two years, or such longer period as the Bank may prescribe, a record stating the complaints received, when and how they were dealt with or disposed of.
114. Ombudsperson for financial service providers
(1) The Bank may designate or appoint a suitably qualified person as a Financial Ombudsperson to deal with matters relating to consumer protection in banking and financial services under this Act.
(2) The Bank may, prescribe the manner of dealing with complaints against financial service providers by their customers.
115. Control of advertisements
(1) The Bank may make rules in respect of the publication, form and content of advertisements relating to a financial service provider.
(2) Rules made in accordance with sub-section (1) may—
(a) prohibit the publication of advertisements of any description, whether by reference to their contents, to the persons by whom they are published or otherwise;
(b) make provision as to the matters which should or should not be included in such advertisements;
(c) provide for any exemptions from any requirement imposed by this Act; and
(d) provide for offences and penalties for the breach of any requirement of the rules.
(3) The Bank shall give such directives to the person who has published or caused to be published the advertisement as it considers appropriate in the circumstances, where it appears to the Bank that an advertisement made in accordance with this section—
(a) fails to comply with any requirement imposed in the rules made in terms of this section; or
(b) is false or misleading.
(4) A directive given, in terms of sub-section (1), may require—
(a) a person to modify the advertisement, in whole or in part; or
(b) the publication of the advertisement to cease.
(5) Nothing in this section shall prejudice any remedy that an aggrieved person may have against a person who published or caused to be published an advertisement contrary to the requirements of the rules made in accordance with this section.
(6) A person who contravenes this section commits an offence and is liable, upon conviction, to a fine not exceeding five hundred thousand penalty units or imprisonment for a term not exceeding five years, or to both.
116. Prohibition of unfair business practices
(1) A financial service provider shall not engage in an unfair business practices.
(2) For purposes of this section, "unfair business practice" means—
(a) a practice that is likely to mislead consumers in making decisions;
(b) a practice that compromises the standard of honesty and good faith which a financial service provider can reasonably be expected to meet; or
(c) a practice which places pressure on consumers and distorts their decisions, by use of harassment or coercion.
117. Prohibition of charges on prepayment
(1) A financial service provider shall not impose a charge or penalty on a borrower for making a prepayment of the principal or an instalment of the principal before its due date where—
(a) the amount of repayment exceeds an amount to be determined by the Bank or extinguishes the debt;
(b) a loan is made to a natural person; and
(c) the loan is not secured by a mortgage on real property.
(2) A financial service provider that contravenes sub-section (1) commits an offence.
(1) An unfair term in a contract concluded with a customer by a financial service provider shall not be binding on the customer.
(2) A contractual term shall be regarded as unfair if—
(a) it has not been individually negotiated; and
(b) contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the customer.
119. Recognition of other laws
The provisions of this Part are without prejudice to any other law in force on the promotion of competition, consumer protection and fair trade.
PART X
INSOLVENCY, DISSOLUTION AND LIQUIDATION OF FINANCIAL SERVICE PROVIDERS
120. Acceptance of deposits by insolvent financial service providers
(1) Despite the Corporate Insolvency Act, or any other law, an insolvent financial service provider shall not—
(a) receive deposits; or
(b) enter into any new, or continue to conduct existing, banking or financial service business, except that which is necessary or incidental to the orderly realisation, conservation and preservation of the assets of a financial service provider.
(2) A transaction with a depositor or a creditor and a settlement in a netting or gross settlement arrangement in accordance with a system of settlement approved by the Bank, or provided for in any other law shall not be treated as prohibited in accordance with sub-section (1) by reason only that the insolvency transaction or settlement took place prior to—
(a) a resolution to liquidate the financial service provider; or
(b) the appointment of a receiver or the taking possession of the financial service provider by the Bank.
(3) A director, senior officer or other employee of a financial service provider who knows or, in the proper performance of duties, could reasonably be expected to know of the insolvency of the financial service provider and who causes or permits any act contrary to this section, commits an offence and is liable, upon conviction, to a fine not exceeding five hundred thousand penalty units or to imprisonment for a term not exceeding five years, or to both.
121. Resolution to voluntarily wind-up or dissolve financial service provider
(1) A financial service provider shall not, except with the written approval of the Bank, pass a resolution for the voluntary winding-up or dissolution of the financial service provider in accordance with the Corporate Insolvency Act, or any other law.
(2) A financial service provider seeking the approval of the Bank for voluntary winding-up or dissolution, in accordance with sub-section (1), shall submit—
(a) a certified copy of the resolution; and
(b) an audited declaration of solvency by the directors to which shall be attached a statement of affairs of the financial service provider showing the—
(i) assets and total amount expected to be realised therefrom;
(ii) liabilities; and
(iii) estimated expenses of the winding-up, made up to the latest practicable date before the resolution to wind-up was made.
(3) The Bank shall approve a voluntary winding-up if the Bank is satisfied that the financial service provider is solvent and has sufficient liquid assets to repay its depositors and all its other creditors in full and without delay.
(4) Where a bank or financial institution passes a resolution for voluntary winding-up or dissolution, the bank or financial institution shall record the date, hour and minute of the passing of the resolution.
(5) A director, senior officer or other employee of a financial service provider who makes a false declaration, causes or permits any false declaration to be made, contrary to sub-section (2), commits an offence and is liable, upon conviction, to a fine not exceeding five hundred thousand penalty units or to imprisonment for a term not exceeding five years, or to both.
122. Duties of financial service provider on voluntary winding-up or dissolution
(1) If a financial service provider receives approval from the Bank for a voluntary winding-up or dissolution, the financial service provider shall—
(a) surrender its licence to the Bank, within seven days of receipt of the approval, and shall cease to do business and may exercise its powers only to the extent necessary to effect its orderly winding-up or dissolution in accordance with the Corporate Insolvency Act, and this Act; and
(b) repay in full its depositors and other creditors.
(2) A director, senior officer or other employee of a financial service provider who knows or, in the proper performance of duties, could reasonably be expected to know of the insolvency of the institution and who causes or permits any act contrary to this section, commits an offence and is liable, upon conviction, to a fine not exceeding five hundred thousand penalty units or to imprisonment for a term not exceeding five years, or to both.
123. Notice of voluntary winding-up or dissolution
(1) A financial service provider shall, within 14 days after receiving approval for a voluntary winding-up or dissolution, by registered mail, or in the prescribed manner and form notify—
(a) every depositor and creditor of the financial service provider of the intended voluntary winding-up or dissolution; and
(b) a person entitled to funds or property held by the financial service provider as a trustee, fiduciary, lessor of a safe-keeping facility or bailee, of the proposed winding-up or dissolution.
(2) A notice, for the purposes of sub-section (1), shall include such information as the Bank may specify.
(3) A copy of a notice, specified in sub-section (1), shall be kept and displayed in a conspicuous place in the public part of each branch and the financial service provider shall cause the notice to be published in the Gazette and in a newspaper of general circulation or any other media in Zambia.
124. Rights of depositors and creditors
(1) An approval by the Bank for the voluntary winding-up or dissolution of a financial service provider as provided in this Part, shall not prejudice the right of a depositor or creditor to payment in full, or to the return of funds or property held, by the financial service provider.
(2) All lawful claims shall be paid promptly and all funds and other property held by the financial service provider shall be returned to the rightful owners within such maximum period as the Bank may direct in writing.
125. Distribution of assets on voluntary winding-up or dissolution
(1) Where the Bank considers that a financial service provider has discharged all the obligations specified in this Act, the remainder of its property shall be distributed to the shareholders, in accordance with the Corporate Insolvency Act, and this Act.
(2) A distribution shall not be made, in accordance with sub-section (1), before—
(a) all claims of depositors and other creditors have been paid in full;
(b) in the case of a disputed claim, the financial service provider has turned over to the Bank, sufficient funds to meet any liability that may be judicially determined; and
(c) uncollected funds, payable to a depositor or creditor, have been turned over to the Bank to be dealt with as unclaimed funds in accordance with this Act.
126. Powers of Bank where assets insufficient or completion unduly delayed
The Bank may take possession of the financial service provider being voluntarily wound-up or dissolved, if the Bank subsequently finds out that—
(a) the assets of a financial service provider are not sufficient to fully discharge all obligations; or
(b) completion of the winding-up or dissolution has been unduly delayed.
127. Powers of Bank in compulsory winding-up or dissolution
(1) Despite the Corporate Insolvency Act, or any other law, the Bank may order the compulsory winding-up or dissolution of a financial service provider and shall record the date, hour and minute that the order shall take effect.
(2) Within seven days of making an order, in accordance with sub-section (1), the Bank shall, in the prescribed manner and form, notify each director, shareholder, depositor, creditor and any other interested party of the order.
(3) The persons notified, in accordance with sub-section (2), may within 30 days of being notified file an appeal against the order to the Court, which shall state the grounds for the objection or appeal.
(4) The Court shall render a decision on an appeal, made in accordance with sub-section (3), within seven days of the appeal being heard and may make any order the Court considers just in the circumstances.
(1) In effecting a compulsory winding-up or dissolution of the financial service provider, in accordance with this Act the Bank may, in addition to any other powers, exercise the powers of the financial service provider concerned.
(2) Without limiting the generality of sub-section (1), the Bank as liquidator of a financial service provider shall have the power to—
(a) bring, carry on or defend an action or legal proceedings in the name and on behalf of the financial service provider; and
(b) carry on the business of the financial service provider only for the beneficial winding-up or dissolution of the financial service provider.
(3) Despite the Corporate Insolvency Act, and any other relevant written law, the Bank shall, after a decision to compulsorily windup or dissolve a financial service provider—
(a) take all necessary steps to terminate safe custody functions performed by the financial service provider and shall return to each owner all assets and property held by the financial service provider as a bailee in relation to the owner;
(b) cause to be made available at each branch for collection by each depositor, creditor, safe custody services customer and bailor of property held by the financial service provider, a customer’s statement of the nature and amount for which each one’s claim is shown in the financial service provider’s records, and shall cause to be published in a newspaper of general circulation in Zambia, a notice informing all such persons of the availability for collection of the customer statement at their respective branches.
(4) A customer’s statement, made in accordance with sub-section (3), shall state that—
(a) a claim by the depositor or creditor shall be filed with the Bank within 60 days from the date of the customer’s statement being made available; and
(b) safe custody services customers and bailors shall be required to withdraw their property within 60 days from the date of the customer’s statement being made available.
(5) Any property held in safe custody, on the premises of the bank or financial institution, that has not been withdrawn before the date specified in the customer’s statement shall be taken into possession by the Bank in the manner prescribed by the Bank.
(6) Any unclaimed funds and property held by the bank or financial institution as a bailee, together with inventories that have not been withdrawn, in accordance with this section, shall be unclaimed funds for the purposes of this Act and shall be dealt with accordingly.
129. Immunity of Bank against depositor or creditor claims
Nothing in this Part shall be taken to impute liability on the Bank or place an obligation on the Bank to meet the claims of a depositor or creditor of a financial service provider that has been wound-up or dissolved.
130. Limitation on filing of claims
The Bank shall, within six months after the last day specified in a customer’s statement, for the purpose of the filing of claims as provided in section 128(4)(a)—
(a) defer payment of any claim that is out of time;
(b) determine the amount, if any, owing to each known depositor or creditor and the priority class of the claim in accordance with this Part;
(c) file into Court, a liquidation schedule showing the steps that the Bank proposes to take;
(d) reject any claim that appears to be of doubtful validity and notify, in the prescribed manner and form, each person whose claim has not been allowed in full; and
(e) publish once a week for three consecutive weeks, in the Gazette, a newspaper of general circulation, or in other media in Zambia where the financial service provider had a branch, a notice of the date and place where the liquidation schedule is available for inspection, and the date, not earlier than 30 days after the date of the third publication of the notice, on which the Bank or person appointed shall file the liquidation schedule into Court.
131. Objection to liquidation schedule
(1) Within 20 days after the filing of a liquidation schedule, as specified in section 130(c), a depositor, creditor or owner of a financial service provider, and any other interested party, may file with the Court an objection to any step proposed.
(2) The Court shall consider an objection, filed in accordance with sub-section (1), and may—
(a) order that appropriate modification of the schedule be made; or
(b) set aside the objection.
(3) The Bank may, after the filing of the liquidation schedule, as specified in section 130(c), make partial distribution to the holders of undisputed claims or claims that have been allowed by the Court, on condition that a proper reserve account is established for the payment of disputed claims.
(1) Despite the Corporate Insolvency Act, or any other written law, in any compulsory winding-up or dissolution of a financial service provider, the following shall be paid in priority to all other debts in the order set—
(a) expenses incurred in the process of compulsory winding-up or dissolution;
(b) depositors whose deposit claim—
(i) are covered by a deposit protection scheme; and
(ii) not covered by a deposit protection scheme;
(c) taxes and rates due;
(d) wages and salaries of employees of the financial service provider, excluding executive employees, senior management and other categories of staff that the Bank may determine, for a period of three months;
(e) charges and assessments due to the Bank; or
(f) other claims against the financial service provider in an order of priority that the Court may determine on application by the Bank.
[S 132(1) subs by s 12 of Act 7 of 2020.]
(2) After payment of all claims submitted and accepted, the remaining claims with interest that are not submitted within the time allowed in accordance with this Part shall be paid, in the order of priority of their submission and at a rate to be fixed by the Bank.
(3) If the amount available for payment for any class of claims, referred to in sub-sections (1) and (2), is insufficient to provide payment in full, the claims within a class shall abate in equal proportions and for the purposes of this section each paragraph of sub-section (1) constitutes a separate class of claims and the claims referred to sub-section (2) constitute another separate class of claims.
(4) If the amount available for payment for any class of claims, referred to in sub-section (1) is insufficient to provide payment in full, the claims shall abate in equal proportions.
(5) The Bank shall establish a scheme for the protection of depositors.
Any undistributed funds remaining after a final distribution, as provided for in this Part, shall be taken into possession and held by the Bank and subsequently dealt with in accordance with this Act.
134. Final distribution in compulsory winding-up or dissolution
Any assets remaining after all claims have been paid in a compulsory winding-up or dissolution of a financial service provider, shall be distributed among the shareholders.
135. Restriction of action by third parties
Despite the Corporate Insolvency Act, or any other written law to the contrary, a person shall not commence proceedings for the winding-up or dissolution of a financial service provider, except where the proceedings are commenced by a financial service provider in accordance with this Part.
136. Power of Bank in relation to insolvent financial business
Despite this Part, where a financial business becomes insolvent, unless the Bank determines that the winding-up or dissolution shall be proceeded with in accordance with this Part, the Corporate Insolvency Act, shall apply.
PART XI
COMPLAINTS AND APPEALS PROCESS
137. Reasons for decisions and right to be heard
(1) Where the Bank makes a decision in accordance with this Act, the Bank shall, by notice in writing—
(a) inform the person affected by the decision of the reasons for the decision; and
(b) invite the person so affected to make written representations, against the decision of the Bank, within a time stated in the notice.
(2) The Bank may, on receipt of any representations made in accordance with sub-section (1)(b), reaffirm, revoke or vary its decision and notify the person accordingly.
(3) A decision of the Bank, made in accordance with sub-section (1), shall remain in force unless reversed by the Bank.
[S 137(3) am by s 13 of Act 7 of 2020.]
A person aggrieved by a decision of the Bank may, within seven days of receipt of the decision, notify the Bank and the Minister, in the prescribed manner and form, of the person’s intention to appeal to the tribunal against the decision.
139. Appointment and convening of tribunal
(1) The Minister shall, within 30 days after receipt of a notice made in accordance with section 138, constitute and convene a tribunal.
(2) The tribunal shall consist of the following members appointed by the Minister—
(a) a chairperson, who shall be a person qualified to be appointed as a Judge of the Court; and
(b) two other members with knowledge and experience in law, banking and finance, commerce or accountancy.
(3) The members of a tribunal shall be appointed on such terms and conditions as may be specified in their letters of appointment.
(1) A tribunal shall hear and determine an appeal on its merits, within 30 days of being convened, taking into account this Act and any other relevant written law.
[S 140(1) subs by s 14 of Act 7 of 2020.]
(2) A tribunal may determine its own procedure and shall not be bound by the rules of evidence.
(3) A tribunal shall afford the appellant the right to appear personally or be represented by a practitioner or an agent.
(1) A tribunal may order compensation against the Bank where the tribunal finds the Bank to have acted contrary to this Act or any other written law on the matter before the tribunal.
(2) An appeal against a decision of a tribunal, on a point of law, shall lie to the Court of Appeal.
[S 141 subs by s 15 of Act 7 of 2020.]
PART XII
GENERAL PROVISIONS
(1) Where the Bank has reason to believe that a person is carrying on banking or financial business or providing financial services without a licence, contrary to the conditions of a licence or this Act, rules and regulations, the Bank shall, by its employees or agents, enter the premises on which the business is being conducted or services provided, to ascertain the facts of the matter and may access and examine the books, accounts and records of that person.
(2) A person who refuses or fails to make available for examination any document or provide any information requested for purposes of or during an investigation, as provided in sub-section (1), commits an offence, and is liable, upon conviction, to a fine not exceeding five hundred thousand penalty units or imprisonment for a term not exceeding five years, or to both.
(1) Subject to this section, any person may, on request, review or copy any document lodged with the Bank in terms of this Act or any regulations or rules made in accordance with this Act.
(2) The Bank may, by rules, specify procedures for making requests for access, as provided in sub-section (1), and the terms and fees to be paid for purposes of such access.
(3) The Bank may refuse to authorise a document to be reviewed or copied, in whole or part, where it determines that information in the document is—
(a) confidential to the person lodging the document and has a real commercial value to the person that would be seriously and unreasonably prejudiced if the information were to be made generally available; or
(b) personal information about a person and it is in the public interest that the information should not be generally available.
144. Offences committed partly in and partly out of Zambia
(1) Where this Act or any rules and regulations, made in accordance with this Act, provide that a person commits an offence where the person does a particular act, the offence is deemed to have been committed, even where the act is done partly outside Zambia.
(2) Where this Act or any regulations and rules, made in accordance with this Act, provide that a person commits an offence where the person does two or more particular acts, the offence is deemed to have been committed, even if some of those acts are done outside Zambia.
145. Continuing acts or offences
Where in accordance with this Act—
(a) an act is required to be done within a particular period or before a particular time and the obligation to do the act continues after the period has ended or the time has passed; or
(b) failure or refusal to comply with the provision is an offence and such failure continues,
the person commits a separate offence for each day on which the failure or refusal continues and is liable to an administrative penalty for each day on which the failure or refusal continues or, upon conviction, to a penalty prescribed by the Minister, by statutory instrument, for each day that the offence continues.
146. Actions by Bank on conviction for offence
(1) A person who is convicted of an offence, in accordance with this Act, shall have that person’s licence or authorisation cancelled, as the case may be, and may not be licensed or authorised in terms of this Act, for a period determined by the Bank, and may be barred from participating, in any manner, in the provision of a banking or financial service on such terms and conditions as the Bank may determine.
(2) The Bank may, on representation, review the bar as specified in sub-section (1) and may, where an applicant shows good cause, reduce the period determined in accordance with sub-section (1).
A person, other than a bank, shall not, without the written approval of the Bank, use the word "bank", or any of its derivatives in any language, or any other word or symbol indicating the transaction of banking business, in its name or in any prospectus, advertisement or statement of any kind published or made to describe its business in Zambia.
148. Restriction on use of name to indicate banking or financial business or financial service provider
(1) Subject to sub-section (2), a person carrying on a business, unless the person is licenced as a financial service provider, shall not use any name which indicates or may reasonably be understood to indicate, whether in English or other language, that the business is being operated by a financial service provider or that it is carrying on banking or financial business.
(2) A person shall not falsely represent to the public or any member of the public that the person—
(a) holds a licence to conduct any banking business or provide financial services; or
(b) is licensed to conduct any financial business of any kind.
(3) Any person acting contrary to this section commits an offence and shall be liable, upon conviction, to a fine not exceeding five hundred thousand penalty units or to imprisonment for a term not exceeding five years, or to both.
(4) Sub-section (1) shall not—
(a) prohibit the use of that kind of name by a company or other entity incorporated or otherwise established outside Zambia and which has no permanent place of business in Zambia for the purposes of soliciting business or advertising its business in Zambia;
(b) apply to—
(i) a regional or international financial service provider whose membership consists partly or wholly of member States; or
(ii) such other person as the Minister may, by statutory instrument, exempt.
(5) An authority which, in accordance with any other written law, is responsible for the registration of companies or business names shall not register a company or a name of a business that would be in contravention of sub-section (1).
(6) Where a company or the name of a business is already registered in a style that is prohibited by sub-section (1), the Bank shall notify the authority responsible for the registration of the company or business name to direct the person or company to alter or modify the name so as to comply with sub-section (1).
149. Validity of certain acts by financial service provider
(1) A transaction entered into, in contravention of this Act, by a financial service provider, shall not be void or ineffective by reason only of the contravention, and shall not be voidable at the instance of the financial service provider, unless the Court orders otherwise.
(2) Subject to a financial service provider’s articles of association, it shall not be necessary for a financial service provider to pass a resolution in order to exercise any power conferred by this Act.
150. Power to summon officers, directors and shareholders
(1) Where the Bank considers that an officer, director or shareholder, past or present, of a financial service provider, has any information relating to the operations of the financial service provider which the Bank considers necessary for the performance of its supervisory functions, the Bank may, in the prescribed manner, summon that officer, director or shareholder, for an examination.
(2) A person who, when summoned by the Bank, in accordance with sub-section (1)—
(a) fails without reasonable excuse to appear before the Bank for the examination;
(b) withholds information; or
(c) provides information which is false in any material particular,
commits an offence and is liable, upon conviction, to a fine not exceeding two hundred thousand penalty units or to imprisonment for a term not exceeding two years or to both.
151. Submission of information and documents to Bank
(1) If in the exercise of any of its powers, performance of its functions or the discharge of its duties as provided in this Act, or in accordance with any other written law, the Bank requires any information from a financial service provider, any other person engaged in the provision of banking or financial services, a company affiliated, associated, holding or subsidiary company or any person that controls a financial service provider, on any matter relating to the affairs or business of the financial service provider, person or company, the financial service provider, person or company, shall submit the information to the Bank.
(2) A financial service provider required to furnish or supply a document to the Bank shall, in the case of a document prepared by the financial service provider, the form of which has not been prescribed by the Bank, ensure that the document is signed by the chief executive officer and the chief financial officer or a person authorised by the financial service provider.
152. Alternative financial services
(1) The Bank may authorise a financial service provider to provide alternative financial services.
(2) The Bank shall prescribe the rules for the provision of alternative financial services.
153. Publication of information
(1) Where the Bank considers a publication to be necessary or appropriate, the Bank may publish, in whole or in part, any information or data furnished in accordance with this Act.
(2) The Bank shall not reveal to a person information regarding the affairs of a customer of a financial service provider that was obtained in the performance of the Bank‘s functions, as provided in this Act, unless lawfully required to do so.
The Bank may, at the request of a financial service provider or other interested person, extend any period within which a financial service provider is obliged to furnish any document or information in accordance with this Act.
A person who issues or takes part in the issuance of a document, referred to in this Act, which is false in any material particular, commits an offence and is be liable, upon conviction, to a fine not exceeding two hundred thousand penalty units or to imprisonment for a term not exceeding two years, or to both.
156. Immunity of officer, agent or employee of Bank
An action or other proceeding shall not lie or be instituted against an officer, agent or employee of the Bank in respect of any act done or omitted to be done by that officer, agent or employee in good faith in the exercise or performance, of any powers, functions or duties conferred by or in accordance with this Act.
157. Money circulation schemes
(1) A person shall not—
(a) conduct, or participate in, a money circulation scheme; or
(b) issue a notice, circular, prospectus, proposal or other document inviting the public to subscribe to a money circulation scheme.
(2) A person who contravenes sub-section (1) commits an offence and shall be liable, upon conviction, to an administrative penalty as specified in this Part.
158. Utilisation of collateral for settlement of certain obligations
(1) Collateral that is held by the Bank on behalf of a clearing house or a payment system for the purpose of settling the obligations of a financial service provider, which is a member of the clearing house or payment system, shall be utilised for that purpose by the Bank in accordance with the terms and conditions approved by the Bank and shall not be subject to any claim.
(2) A certificate, issued by the Bank, certifying that the collateral or any part thereof has been utilised to meet the obligations of the clearing house or payment system shall be prima facie evidence of the matters stated in the certificate.
(3) In the case of a financial service provider in respect of which the winding up, dissolution or liquidation has commenced in accordance with this Act, the balance of the collateral, after the collateral has been utilised in accordance with sub-section (1), shall be dealt with in accordance with Part X.
159. Special reserve or liability insurance
A financial service provider shall—
(a) maintain a special reserve account, with an amount that the board considers adequate, which shall be reserved exclusively for making good any loss resulting from the negligence or dishonesty of any director, chief executive officer, chief financial officer, manager or other employee of the financial service provider;
(b) insure itself against loss, to an amount that the board considers adequate; or
(c) undertake a commitment that the Bank may consider acceptable for the purpose of this section.
160. Unclaimed funds and personal property
(1) This section applies to—
(a) a demand, savings or matured time deposit, together with interest or dividend thereon, excluding any charges that may lawfully be withheld, in respect of which the owner has not, within the last 10 years—
(i) increased or decreased the amount of the deposit, or presented identification documents with evidence of the deposit crediting the interest or dividends;
(ii) corresponded in writing with the bank or financial institution; or
(iii) indicated an interest in the deposit as evidenced by a memorandum on file with the bank or financial institution;
(b) funds paid toward the purchase of a share or other interest in a security, issued by a financial service provider not listed or quoted on an exchange regulated under the Securities Act and any interest or dividend relating thereto, excluding any charge that may lawfully be withheld, in respect of which the owner has not, within the last 10 years—
(i) increased or decreased the amount of the funds or deposit;
(ii) corresponded in writing, with the bank or financial institution; or
(iii) otherwise indicated an interest in the funds as evidenced by a memorandum in the records of the financial service provider; and
[S 160(1)(b) subs by s 16 of Act 7 of 2020.]
(c) funds or other personal property, removed from a safe deposit box or any other safe-keeping facility on which the lease or rental period has expired due to the non-payment of rental charges or by reason of some other default by the lessee, or surplus amounts arising from the sale of the property thereof in accordance with any other written law, that have been unclaimed by the owner for more than 10 years from the date on which the lease or rental period expired.
(2) Any of the funds or personal property, specified in sub-section (1)(a), (b) or (c), shall be presumed to be abandoned on the expiration of the periods specified in that sub-section, if the person that owns the funds or personal property fails to respond to a notice in writing, sent by the financial service provider by prepaid registered post, to the last known address of the person in the records of the financial service provider.
(3) A financial service provider holding funds or personal property presumed abandoned under this section shall report to the Bank on the amount and nature of such funds or property, in such form and at such time as may be prescribed by the Bank, and shall pay such funds or relinquish the property to the Bank upon expiration of the time provided in this section for the presumption of abandonment to arise.
(4) The financial service provider shall retain records and inventory of funds paid or property relinquished in accordance with sub-section (3).
(5) A person whose funds have been paid or whose property has been relinquished to the Bank, in accordance with this section, may claim the funds from the Bank within a period of six years from the date of receipt of the funds or the property by the Bank.
(6) An action to recover, or other action in respect of, any funds or property presumed abandoned and paid in or relinquished in accordance with this section, may not be brought against the paying bank or against the Bank after the sixth year following payment or relinquishment to the Bank.
(7) Where unclaimed funds or property are not claimed after the expiration of the period referred to in sub-section (5), the funds shall vest in the State.
The Bank may by rules, and on such terms and conditions as it may determine, delegate its licensing, or supervisory powers specified in this Act to an agent.
The Bank may, on such terms and conditions as it may prescribe, exempt any financial service provider from any of the provisions of this Act and may, in like manner, provide for the variation or revocation of any exemption granted.
A person that commits an offence in terms of this Act for which a penalty is not specified is liable, upon conviction, to a fine not exceeding two hundred thousand penalty units or to imprisonment for a term not exceeding two years, or to both.
164. Offences by body corporate or unincorporated body
Where an offence under this Act is committed by a body corporate or unincorporated body, and the director, manager or shareholder of that body is suspected to have committed the offence and is charged of that offence, that director, manager or shareholder of the body corporate or unincorporated body is liable, upon conviction, to the penalty specified for the offence, unless the director or manager proves to the satisfaction of the court that the act constituting the offence was done without the knowledge, consent or connivance of the director or manager or that the director or manager took reasonable steps to prevent the commission of the offence.
(1) Where the Bank is satisfied, after due investigation, or where a person admits that the person has committed an offence in terms of this Act or regulations or rules made in accordance with this Act, the Bank may compound the offence and impose such an administrative penalty, as may be prescribed.
(2) If a person, on whom an administrative penalty is imposed, in accordance with this section, fails to pay the penalty within the time ordered by the Bank, the Bank may, recover the penalty by action in a court of competent jurisdiction.
(1) The Bank shall, within 6 months from the 1>st> day of January of each year, submit an industry report, to the Minister on the performance of the financial service providers for the 12 months ending on the preceding 31>st> December.
(2) The Minister shall, not later than 30 days after the first sitting of the National Assembly next after receipt of the report referred to in sub-section (1), lay the report before the National Assembly.
(1) The Bank may issue and publish regulatory statements.
(2) The Bank may impose an administrative penalty on a financial service provider that contravenes a regulatory statement.
(1) The Bank may, by statutory instrument, make rules for or with respect to any matter that by this Act is required or permitted to be prescribed by the Bank, or that is necessary to be prescribed for purposes of carrying out or giving effect to this Act.
(2) Without limiting the generality of sub-section (1), rules made under sub-section (1) may make provision for—
(a) the conduct of business by financial service providers and their representatives;
(b) matters incidental to the licensing of any financial service providers in accordance with this Act;
(c) the class of persons in relation to whom, and the manner and circumstances in which, financial service providers may conduct or provide banking or financial services;
(d) the correction of any errors in any register or record kept in accordance with this Act;
(e) particulars to be recorded for the purposes of this Act, in relation to accounts of financial service providers;
(f) the lodgment of auditor’s reports and the information to be contained in the auditor’s report;
(g) the operating hours for financial service providers;
(h) the lodgment by financial service providers of annual financial statements;
(i) the exemption, on such terms and conditions as may be prescribed, of any financial service providers from any specified provision of this Act or any rule made in accordance with this Act, and the revocation of any such exemption or the modification of any such terms or conditions;
(j) administrative penalties to be imposed;
(k) the type of business that the Bank considers as constituting a banking or financial service;
(l) maintenance of the confidentiality of customers of financial service providers;
(m) information and the matters to be displayed on business stationery of financial service providers;
(n) insurance by financial service providers against negligence or default;
(o) the practice and conduct of share registers and other registers that are to be kept by financial service providers in accordance with this Act;
(p) the resolution of disputes among financial service providers;
(q) the making of annual or other regulatory returns to the Bank by financial service providers;
(r) mandatory disclosures and registration of interests in financial service providers;
(s) determination of fit and proper test for the purposes of this Act;
(t) anti-money laundering and countering the financing of terrorism by financial service providers; and
(u) any saving or transitional provisions the Bank considers necessary or convenient to be made in consequence of the enactment of this Act and the repealed Act.
(3) The Bank may, by statutory instrument, make other rules to provide for—
(a) the contents, form and issue of a prospectus, financial statements, annual reports and other documents required or provided for in this Act;
(b) requirements for the display and use of unique numbers allocated for licences;
(c) requirements for transactions, including requirements prohibiting or restricting a licensed company from commencing or carrying out business;
(d) the formulation and publication of codes of conduct for financial service providers, officers and employees;
(e) requirements for financial service providers to make reports to the Bank, either regularly or on the occurrence of specified events or circumstances;
(f) requirements for contents, publication and dissemination of reports to the Bank by—
(i) financial service providers; and
(ii) officers and former officers of financial service providers;
(g) prudential rules, including rules as to capital adequacy, assets and other resources for financial service providers;
(h) disclosures to be made by financial service providers;
(i) keeping of books and records by financial service providers;
(j) the transfer of business, contracts or other engagements of a financial service provider on insolvency or winding-up;
(k) the taking of fees and the levying of charges;
(l) the criteria for declaration as publicly traded companies; and
(m) the effective administration and implementation of this Act.
(4) The Bank may issue rules prescribing the segregation and safe custody of customer moneys or other property.
(1) The Minister may, on the recommendation of the Bank, make regulations for carrying out or giving effect to the provisions of this Act.
(2) Without limiting the generality of sub-section (1), regulations made in accordance with sub-section (1) may—
(a) prescribe fees or charges payable in respect of any matter arising under, provided for, or authorised by, this Act;
(b) prescribe offences and penalties not exceeding five hundred thousand penalty units or imprisonment for a period not exceeding five years, or both;
(c) prescribe the forms for applications, licences, approvals, registers, notices, orders and other documents required for the purposes of this Act;
(d) prescribe the information to be given in returns and other documents delivered or made for the purposes of this Act;
(e) provide the procedure for the service of notices, orders and documents as specified in this Act and the times at which they shall be considered to have been served; and
(f) prescribe the procedure for objections, for purposes of this Act, and the making, consideration, hearing and determination of objections and appeals.
The Banking and Financial Services Act, 1994 is repealed.
171. Savings and transitional provisions
(1) Despite the repeal under section 170—
(a) a financial service provider or a representative office that was, immediately before the commencement of this Act, licensed or deemed to be licensed in accordance with the repealed Act, shall be deemed to be the holder of a licence granted in accordance with this Act, and shall be subject to the same limitations and conditions attached to its licensing;
(b) any application pending, in accordance with the repealed Act, shall be deemed to have been made in accordance with the corresponding provisions of this Act, and shall be dealt with in accordance with this Act;
(c) any right or benefit accruing, or liability incurred, in accordance with the repealed Act, shall continue in accordance with and subject to this Act; and
(d) any order, notice or direction made or given and in force, in accordance with the repealed Act, shall, unless inconsistent to this Act, continue in force until revoked in a manner specified in this Act.
(2) The Minister may, by statutory instrument, make such other savings and transitional provisions as may be considered just or expedient for a smooth transition from the structures, requirements and forms provided for in the repealed Act.
INDEX TO SUBSIDIARY LEGISLATION
Banking and Financial Services (Designation of Urban and Rural Areas) Order
Banking and Financial Services (Cost of Borrowing) Regulations
Banking and Financial Services (Payment of Fees) Regulations
Banking and Financial Services (Return of Unclaimed Funds) Regulations
Banking and Financial Services (Reserve Account) Regulations
Banking and Financial Services (Disclosure of Deposit Charges and Interest) Regulations
Banking and Financial Services (Capital Adequacy) Regulations
Banking and Financial Services (Fixed Assets Investment) Regulations
Banking and Financial Services (Foreign Exchange Risk Management and Exposure) Regulations
Banking and Financial Services (Large Loan Exposures) Regulations
Banking and Financial Services (Insider Lending) Regulations
Banking and Financial Services (Money Circulation Pyramid Schemes) Regulations
Banking and Financial Services (Bureau de Change) Regulations
Banking and Financial Services (Exemption) Regulations
Banking and Financial Services (Micro-finance) Regulations
Banking and Financial Services (Restriction on Kwacha Lending to Non-Resident) Regulations
Banking and Financial Services (Bank Holiday) (Declaration) Order
Banking and Financial Services (Classification and Provisioning of Loans) (Revocation) Order
BANKING AND FINANCIAL SERVICES (DESIGNATION OF URBAN AND RURAL AREAS) ORDER
Arrangement of Paragraphs
Paragraph
1. Title
2. Designation of rural and urban areas
SI 92 of 1989.
This Order may be cited as the Banking and Financial Services (Designation of Rural and Urban Areas) Order.
2. Designation of rural and urban areas
(1) The areas specified in the First Schedule to this Order are hereby designated as urban areas.
(2) The areas specified in the Second Schedule to this Order are hereby designated as rural areas.
[Paragraph 2(1)]
URBAN AREAS
| Central Province |
<tdKapiri Mposhi
Mkushi
Copperbelt Province
<td<tdNdola
Kitwe
Chingola
Mufulira
Chililabombwe
Luanshya
Kalulushi
Eastern Province
<td<tdChipata
Petauke
Luapula Province
<td<tdMansa
Lusaka Province
<td<tdLusaka
Kafue
Northern Province
<td<tdKasama
Mpika
Isoka
Mbala
North-Western Province
<td<tdSolwezi
Zambezi
Southern Province
<td<tdChoma
Livingstone
Mazabuka
Monze
Kalomo
Siavonga
Maamba
Western Province
<td<tdMongu
[Paragraph 2(2)]
RURAL AREAS
Those areas not specified in the First Schedule.
Arrangement of Regulations
Regulation
1. Title
2. Interpretation
3. Application for registration as commercial bank or financial institution
4. Registered commercial bank to submit monthly statements to Registrar
5. Registered financial institution to submit monthly and quarterly statements to Registrar
6. Rate of conversion of non-Zambian money to Zambian currency to be stated
[Regulations by the Minister]
SI 226 of 1973.
These Regulations may be cited as the Banking Regulations.These Regulations made under the repealed Act continues in operation under section 15 of the Interpretation and General Provisions Act.')">FIND*">
In these Regulations, unless the context otherwise requires—
"form" means the appropriate form prescribed in the Schedule.
3. Application for registration as commercial bank or financial institution
An application for registration as a commercial bank or a financial institution made in terms of paragraphs (a) and (b) of sub-section (1) of section 4 or section 5 of the Act shall be in revised Form ZBK No. 1 and shall be accompanied by the following documents—
(a) a true copy, certified by the chairman and a director of the applicant, of the memorandum and articles of association, or other document relating to the incorporation or registration of the applicant as a body corporate, and regulating the conduct of the business of the applicant; and
(b) a true copy, certified by the Registrar of Companies, of the certificate of incorporation of the applicant, issued in terms of the law relating to companies; and
(c) a statement certified by the chairman, a director and the auditors of the applicant showing the authorised and paid-up capital of the applicant at a date not earlier than 30 days before the date of the application.
4. Registered commercial bank to submit monthly statements to Registrar
(1) The monthly statement which a registered commercial bank is required to prepare and submit to the Registrar in terms of—
(a) paragraph (a) of sub-section (1) of section 60 of the Act shall be in revised Form ZBK No. 2;
(b) paragraph (b) of sub-section (1) of section 60 of the Act shall be in revised Form ZBK No. 3.
(2) For the purposes of paragraph (c) of sub-section (1) of section 60 of the Act, a registered commercial bank shall prepare and submit to the Registrar within 28 days after the last day of every calendar month a supplementary statement of the assets and liabilities of its offices and branches in Zambia at the close of the last business day of that month.
(3) The supplementary statement referred to in sub-regulation (2) shall be in revised Form ZBK No. 3.
5. Registered financial institution to submit monthly and quarterly statements to Registrar
(1) The monthly statement which a registered financial institution is required to prepare and submit to the Registrar in terms of paragraph (a) of sub-section (1) of section 60 of the Act shall be in revised Form ZBK No. 4.
(2) The quarterly statement which a registered financial institution is required to prepare and submit to the Registrar in terms of paragraph (b) of sub-section (1) of section 60 of the Act shall be in revised Form ZBK No. 5.
(3) For the purposes of paragraph (c) of sub-section (1) of section 29 of the Act, a registered financial institution shall prepare and submit to the Registrar within 35 days after the last day of each quarter ending on the 31st March, 30th June, 30th September and 31st December a supplementary statement of the assets and liabilities of its offices and branches in Zambia at the close of the last business day of that quarter.
(4) The supplementary statement referred to in sub-regulation (3) shall be in revised Form ZBK No. 5.
6. Rate of conversion of non-Zambian money to Zambian currency to be stated
If in a document furnished to the Registrar in terms of these Regulations a sum of money is not stated in the currency of Zambia, the appropriate rate of conversion of the sum of money to Zambian currency shall be stated in the document or in an annexure thereto.
[Regulation 2]
PRESCRIBED FORMS
|
>Form ZBK No. 1 (Revised) |
Application for registration as a commercial bank or financial institution |
|
Form ZBK No. 2 (Revised) |
Monthly Statement of— (a) Liabilities to the Public; and of a Commercial Bank in Zambia. |
|
Form ZBK No. 3 (Revised) |
Monthly statement of assets and liabilities and supplementary statement of a commercial bank in Zambia. |
|
Form ZBK No. 4 (Revised) |
Monthly statements of— (a) Liabilities to the Public; (b) Capital; and (c) Liquid Assets; of a Financial Institution in Zambia |
|
Form ZBK No. 5 (Revised) |
Quarterly statement of assets and liabilities and supplementary statement of a financial institution in Zambia.> |
Form ZBK No. 1 (Revised)
REPUBLIC OF ZAMBIA
BANKING AND FINANCIAL SERVICES ACT
[Section 4]
Banking Regulations
[Regulation 3]
APPLICATION FOR REGISTRATION AS A COMMERCIAL BANK OR A FINANCIAL INSTITUTION
1. Name.................................................................................................................................................................................. (The name under which the applicant(s) wants/want to be registered)
2. Nature of business ............................................................................................................................................................................................................ (The business in respect of which the application is made)
3. Address of applicant’s head office ..........................................................................................................................................
4. Address of applicant’s principal administrative office ......................................................................................................................................................................................................
5. In case of a Commercial Bank—
(a) Names of Directors ...........................................................................................................
(b) Names of Local Directors ......................................................................................................................................................................................................................................................................................................................................................................................................................... (These must be Zambian citizens and/or established residents of Zambia)
(c) What is the proposed authorised capital and paid-up capital of the Commercial Bank to be registered?
K ......................................
6. In case of a Financial Institution—
(a) What is the proposed authorised capital and paid-up capital of the Financial Institution to be registered?
K ......................................
(b) State the amount of unimpaired reserve funds which the Financial Institution to be registered intends to maintain in K .........................................................................................................................................................................................................................................
7. Name of general manager ..............................................................................................................
8. Name of chief executive officer .......................................................................................................
9. Name of chief accounting officer ....................................................................................................
10. Name and qualifications of applicant’s auditors ....................................................................................................................................................................................................................................................................................................................................................................................................................
11. Please lodge with your application the following documents—
(a) memorandum and articles of Association;
(b) Statement of paid-up capital; and
(c) Certificate of incorporation under the Companies Act of Zambia.
12. I/We hereby certify that to the best of my/our knowledge and belief the information given above is correct and true.
<td
.....................................................................................
<td
Chairman
<td
......................................................................................
<td
Director
<td
......................................................................................
<td
Chief Executive Officer
Form ZBK No. 2 (Revised)
REPUBLIC OF ZAMBIA
BANKING AND FINANCIAL SERVICING
[Section 60(1)(a)]
Banking Regulations
[Regulation 4(1)(a)]
MONTHLY STATEMENT OF—
(a) LIABILITIES TO THE PUBLIC;
(b) LIQUID ASSETS;
OF A COMMERCIAL BANK IN ZAMBIA.
Reporting Commercial Bank ....................................................................................................
Date to which this return refers ...................................................................................., 20......
K
I.
Liabilities to the Public
1. Demand Deposits
.........……………....
2. Savings Deposits
.........……………....
3. Time Deposits
.........……………....
4. Bills payable
.........……………....
.........……………....
TOTAL LIABILITIES TO THE PUBLIC
.........……………....
II.
Liabilities to the Public at the end of the previous month
.........……………....
III.
Liquid assets
.........……………....
(a) Gold coin and bullion
.........……………....
(b) Notes and coins in the currency of Zambia
.........……………....
(c) Balances at the bank of Zambia including the minimum reserve balances referred to in paragraph (b) of sub-section (1) of section 39 of the Bank of Zambia Ordinance No. 33 of 1964
.........……………....
(d) Money at call with any bank
.........……………....
(e) Treasury bills issued by the Government
.........……………....
(f) Bills of exchange and promissory notes eligible for discount at the bank of Zambia
.........……………....
(g) Local registered securities which are issued or guaranteed by the Government and which have a final maturity date of not more than six years (at book value) and such other securities as the Minister may have approved
.........……………....
(h) Items in transit between banks, between branches of banks and between branches of head office of banks
.........……………....
(i) Other assets approved by the Minister under paragraph (e) of sub-section (3) of section 21of the Banking Act, 1971
.........……………....
.........……………....
TOTAL LIQUID ASSETS
.........……………....
|
Total liquid assets as a percentage of total liabilities to the public |
.................. per cent |
|
Total liquid assets (as stated above) as a percentage of total liabilities to the public at the end of the previous month |
..................per cent |
Form ZBK No. 3 (Revised)
REPUBLIC OF ZAMBIA
BANKING AND FINANCIAL SERVICING
[Sections 60(1)(b) and (c)]
Banking Regulations
[Regulations 4(1)(b), (2) and (3)]
MONTHLY STATEMENT OF ASSETS AND LIABILITIES AND SUPPLEMENTARY STATEMENT OF A COMMERCIAL BANK IN ZAMBIA
Reporting Bank ...........................................................................................................................
Date to which this return refers ...................................................................................., 20…....
|
Supplementary statement in terms of section 28(1)(c) of the Act |
Statement in terms of section 28(1)(b) of the Act. (For publication where applicable in the Government Gazette) |
|
|
1. Notes and coins |
K |
K |
|
(a) Zambian notes |
…………………… |
|
|
(b) Zambian coins |
…………………… |
|
|
(c) Other notes and coins |
…………………… |
|
|
2. Balances held with the bank of Zambia |
||
|
(a) Statutory reserves |
…………………… |
|
|
(b) Other balances |
…………………… |
|
|
3. Balances held with registered commercial banks in Zambia |
||
|
(a) Assets in transit |
…………………… |
|
|
(b) Other items |
…………………… |
|
|
4. Balances held with banks abroad |
||
|
(a) head office and/or branches in— |
…………………… |
|
|
(i) Britain |
…………………… |
|
|
(ii) Zimbabwe |
…………………… |
|
|
(iii) Malawi |
…………………… |
|
|
(iv) Republic of South Africa |
…………………… |
|
|
(v) Other countries |
…………………… |
|
|
(b) Other banks in— |
…………………… |
|
|
(i) Britain |
…………………… |
|
|
(ii) Zimbabwe |
…………………… |
|
|
(iii) Malawi |
…………………… |
|
|
(iv) Republic of South Africa |
…………………… |
|
|
(v) Other Sterling Area countries |
…………………… |
|
|
(vi) Dollar Area countries |
…………………… |
|
|
(vii) Other countries |
…………………… |
|
|
5. Government of Zambia Securities (at book value) |
||
|
6. Other investments in Zambia (at book value) |
||
|
7. Treasury bills issued by the Government of Zambia |
||
|
8. Bills of exchange |
||
|
(a) discounted and purchased |
…………………… |
|
(b) receivable |
…………………… |
|
|
9. Loans and advances to |
||
|
(a) The public |
…………………… |
|
|
(b) Government |
…………………… |
|
|
(c) Statutory bodies, municipalities, T.M.B.s, local authorities, etc |
…………………… |
|
|
(d) Non-residents |
…………………… |
|
|
(e) Parastatal organisations |
…………………… |
|
|
10. Balances held with branches |
||
|
(a) Assets in transit |
…………………… |
|
|
(b) Other items |
…………………… |
|
|
11. Bank premises |
||
|
12. Acceptances |
||
|
13. Other assets |
||
|
TOTAL ASSETS |
|
LIABILITIES |
K |
K |
|
1. Demand deposits |
||
|
(a) Public deposits |
…………………. |
|
|
(b) Government deposits |
…………………. |
|
|
(c) Deposits of statutory bodies, municipalities, T.M.B.s, local authorities, etc |
…………………. |
|
|
(d) Non-residents’ deposits |
…………………. |
|
|
(e) Parastatal organisations |
…………………. |
|
|
2. Savings deposits |
||
|
(a) Public deposits |
…………………. |
|
|
(b) Government deposits |
…………………. |
|
|
(c) Deposits of statutory bodies, municipalities, T.M.B.s, local authorities, etc |
…………………. |
|
|
(d) Non-residents’ deposits |
…………………. |
|
|
(e) Parastatal organisations |
…………………. |
|
|
3. Time deposits |
||
|
(a) Public deposits |
…………………. |
|
|
(b) Government deposits |
…………………. |
|
|
(c) Deposits of statutory bodies, municipalities, T.M.B.s, local authorities, etc |
…………………. |
|
|
(d) Non-residents’ deposits |
…………………. |
|
|
(e) Parastatal organisations |
…………………. |
|
|
4. Amounts owing to registered commercial banks in Zambia |
||
|
(a) Liabilities in transit |
…………………. |
|
|
(b) Other items |
…………………. |
|
|
5. Amounts owing to banks abroad |
||
|
(a) Head office/or branches in— |
…………………. |
|
|
(i) Britain |
…………………. |
|
|
(ii) Zimbabwe |
…………………. |
|
|
(iii) Malawi |
…………………. |
|
|
(iv) Republic of South Africa |
…………………. |
|
|
(v) Other countries |
…………………. |
|
|
(b) Other banks in— |
…………………. |
|
|
(i) Britain |
…………………. |
|
|
(ii) Zimbabwe |
…………………. |
|
|
(iii) Malawi |
…………………. |
|
|
(iv) Republic of South Africa |
…………………. |
|
|
(v) Other Sterling area countries |
…………………. |
|
|
(vi) Dollar area countries |
…………………. |
|
|
(vii) Other countries |
…………………. |
|
|
6. Bills payable |
||
|
7. Amounts owing to branches |
||
|
(a) Liabilities in transit |
…………………. |
|
|
(b) Other items |
…………………. |
|
|
8. Capital |
||
|
9. Reserves |
||
|
10. Acceptances |
||
|
11. Amounts owing to bank of Zambia |
||
|
12. Other liabilities |
||
|
TOTAL LIABILITIES |
Form ZBK No. 4 (Revised)
REPUBLIC OF ZAMBIA
BANKING AND FINANCIAL SERVICES ACT
(Section 60(1)(a))
Banking Regulations
(Regulation 5(1))
MONTHLY STATEMENT OF—
(a) LIABILITIES TO THE PUBLIC;
(b) CAPITAL; AND
(c) LIQUID ASSETS;
OF A FINANCIAL INSTITUTION IN ZAMBIA
REPORTING FINANCIAL INSTITUTION ...............................................................................
DATE OF WHICH THIS RETURN REFERS ......................................................... 20.......
|
I. Liabilities to the public deposits repayable |
K |
|
(a) At seven days’ notice |
|
|
(b) At thirty days’ notice |
|
|
(c) At more than thirty days’ but more than six months’ notice |
|
|
(d) At more than six months’ but not more than twelve months’ notice |
|
|
(e) After twelve months’ notice |
|
|
TOTAL LIABILITIES TO THE PUBLIC |
|
|
II. Liabilities to the public at the end of the previous month |
|
|
III. Capital |
|
|
1. Paid-up equity capital |
|
|
2. Unimpaired reserve funds |
|
|
TOTAL CAPITAL |
|
|
IV. Liquid assets |
> |
|
1. Notes and coins in the currency of Zambia |
> |
|
2. Balances with registered commercial banks in Zambia |
> |
|
3. Money at call with any bank |
> |
|
4. Treasury bills issued by the Government |
> |
|
5. Bills of exchange and promissory notes accepted, endorsed or made, as the case may be, by a bank, maturing in not more than ninety days exclusive of days of grace and payable at any place in Zambia |
|
|
6. Local registered securities which are guaranteed by the Government and which have a final maturity date of not more than six years and such other securities as the Minister may have approved |
|
|
TOTAL LIQUID ASSETS |
|
|
Total liabilities to the public (net of liquid assets) as a percentage of paid-up equity capital and unimpaired reserve funds |
............per cent |
|
Total liquid assets as a percentage of total liabilities to the public |
............per cent |
|
Total liquid assets (as stated above) as a percentage of total liabilities to the public at the end of the previous month |
............per cent |
Form ZBK No. 5 (Revised)
REPUBLIC OF ZAMBIA
BANKING AND FINANCIAL SERVICES ACT
[Section 60(1)(b) and (c)]
Banking Regulations
[Regulations 5(2), (3) and (4)]
QUARTERLY STATEMENT OF ASSETS AND LIABILITIES AND SUPPLEMENTARY STATEMENT OF A FINANCIAL INSTITUTION IN ZAMBIA
Reporting financial institution............................................................................................................
Date to which this return refers ..................................................................................., 20…..........
|
ASSETS |
Supplementary statement in terms of section 29(1)(c) of the Act |
Statement in terms of section 29(1)(b) of the Act. (For publication where applicable in the Government Gazette) |
|
K |
K |
|
|
1. Notes and coins |
> |
> |
|
2. Balances held with registered commercial banks in Zambia |
> |
> |
|
3. Money at call with any bank |
> |
> |
|
4. Treasury bills issued by the Government of Zambia |
> |
> |
|
5. Amounts owing under agreement for hire purchase under the laws of Zambia |
> |
> |
|
6. Bills receivable |
> |
> |
|
7. Notes receivable |
||
|
8. Advances |
||
|
(a) Internal— |
…………………. |
|
|
(i) individuals |
…………………. |
|
|
(ii) companies |
…………………. |
|
|
(b) External |
…………………. |
|
|
9. Securities |
||
|
(a) Of the Government of Zambia |
…………………. |
|
|
(b) Of Zambian municipalities |
…………………. |
|
|
(c) Other |
…………………. |
|
|
10. Other investments |
||
|
11. Other assets |
||
|
(a) Buildings and premises |
…………………. |
|
|
(b) Other |
…………………. |
|
|
TOTAL ASSETS |
|
LIABILITIES |
Supplementary statement in terms of section 29(1)(c) of the Act |
Statement in terms of section 29(1)(b) of the Act. (For publication where applicable in the Government Gazette) |
|
>1. Deposits |
>K |
>K |
|
(a) Internal— |
>…………………….. |
> |
|
(i) individuals |
>…………………….. |
> |
|
(ii) companies |
>…………………….. |
> |
|
(b) External |
>…………………….. |
> |
|
>2. Loans, advances and acceptances |
> |
> |
|
(a) Loans from shareholders— |
…………………….. |
|
|
(i) individuals in Zambia |
…………………….. |
|
|
(ii) companies in Zambia |
…………………….. |
|
|
(iii) external shareholders |
…………………….. |
|
|
(b) Other loans, advances and acceptance |
…………………….. |
|
|
3. Amounts owing to registered commercial banks in Zambia |
||
|
4. Other liabilities |
||
|
(a) Paid-up equity capital— |
…………………….. |
|
|
(i) internal |
…………………….. |
|
|
(ii) external |
…………………….. |
|
|
(b) Other paid-up capital— |
…………………….. |
|
|
(i) internal |
…………………….. |
|
|
(ii) external |
…………………….. |
|
|
(c) Reserves and unappropriated profits |
…………………….. |
|
|
(d) Other liabilities |
…………………….. |
|
|
TOTAL LIABILITIES |
BANKING AND FINANCIAL SERVICES (COST OF BORROWING) REGULATIONS
[Sections 124 and 47]
Arrangement of Regulations
Regulation
1. Title
2. Interpretation
3. Application
4. Determination of annual rate of interest
5. Cost of borrowing for loans repayable in equal instalments
6. Disclosure requirements
7. Disclosure of cost of borrowing
8. Manner of disclosure of information
9. Payment, credit or charge card
10. No charge or penalty for failure to pay
11. Disclosure of estimates
[Regulations by the Minister]
SI 179 of 1995.
These Regulations may be cited as the Banking and Financial Services (Cost of Borrowing) Regulations.
In these Regulations, unless the context otherwise requires—
"borrower" means a person to whom a loan is proposed to be made;
"cost of borrowing" means administrative charges for services or transactions and any similar changes, but excludes—
(a) a charge for arranging or renewing the loan;
(b) a charge for the issuance of a certificate of search, the provision for examination or the making of copies or a registered document, or the provision of similar services;
(c) a charge for a survey;
(d) a charge or disbursement for the services of a lawyer or notary;
(e) a charge for an appraisal or inspection of assets;
(f) a charge for insurance;
(g) an administrative charge in respect of an overdrawn account, including a charge for honouring a cheque written on an overdrawn account;
(h) a charge for making a pre-payment on the loan; or
(i) a commitment fee as compensation for funds being made available by the lender for use by the borrower and which could be deployed elsewhere;
"principal" means the amount of money borrowed and outstanding at any time, but does not include any portion of the cost of borrowing.
These regulations shall not apply to—
(a) a loan in respect of which the principal amount is less than two-hundred and fifty thousand kwacha and the cost of borrowing on that loan is disclosed to the borrower as an amount expressed in kwacha and ngwee;
(b) a loan made under any Act of Parliament where the rate of interest or the discount that may be charged to the borrower is prescribed under that Act and is disclosed to the borrower;
(c) a loan resulting from the discount or negotiation by a bank or financial institution of a promissory note or other instrument payable by a person other than the borrower; and
(d) a loan made pursuant to a letter of credit.
4. Determination of annual rate of interest
(1) For loans obtained through the use of a line of credit, an overdraft, a payment, credit or charge card, a bank or financial institution shall express the rate of interest charged to a customer as "the annual effective rate of interest" or the annual percentage rate (APR).
(2) The annual percentage rate shall be determined as follows—
APR =
<tdWhere:
5. Cost of borrowing for loans repayable in equal instalments
(1) For loans repayable in equal instalments, the cost of borrowing is determined by the following formula—
where:
"C" is the total cost of borrowing over the term of the loan, expressed as an amount and includes interest plus all other charges of borrowing;
"P" is the average of the principal of the loan that is outstanding at the end of each interest calculation period before applying any payment due at that time;
"R" is the cost of borrowing over the term of the loan, expressed as a rate per annum; and
"T" is the term of the loan, expressed in years.
(2) For the purpose of the calculation set out in sub-regulation (1)—
(a) the rate per annum of the cost of borrowing shall be rounded off to the nearest eighth of a per cent; and
(b) a year shall be calculated as having 365 days.
(1) For the purposes of regulations 7 to 9, where information is to be disclosed by means of a written statement, the information shall be delivered to the borrower personally or sent to the last address of the borrower shown in the records of the bank or financial institution.
(2) The statement through which the disclosure is made shall contain the information set out in the Schedule.
7. Disclosure of cost of borrowing
(1) A bank or financial institution shall disclose the cost of borrowing to the borrower, at or before the time at which the loan is made.
(2) The disclosure referred to in sub-regulation (1) shall—
(a) in the case of an overdraft, be made by means of a written statement or by a notice displayed in each branch of the bank or financial institution; and
(b) in the case of a loan made under the security of a letter of credit or any other arrangement, or where the loan is repayable on demand in amounts that are not fixed or on dates that are not fixed, by means of—
(i) a written statement in the loan agreement or proposed loan agreement;
(ii) a separate written statement; or
(iii) a notation on the promissory note signed or to be signed by the borrower; and
(c) in any other case, by means of a written statement disclosing the information set out in the attached Schedule.
(3) Where a loan referred to in paragraph (b) or sub-regulation (2) is made, the bank or financial institution shall also disclose to the borrower in the manner described in clauses (i) to (iii) of that paragraph—
(a) the manner of calculating the cost of borrowing and determining it as a rate per annum; and
(b) in case of a loan made pursuant to a line of credit or other arrangement, the maximum principal that can be borrowed under the line of credit or other arrangement.
(4) Where the cost of borrowing in respect of a loan is subject to variation, the bank or financial institution shall by means of a written statement or by a notice displayed in each branch of the bank or financial institution, and within a reasonable time, disclose to the borrower any variation that affects the amount of any periodic payments to be made by the borrower.
8. Manner of disclosure of information
A bank or financial institution shall disclose to the borrower the information required by sub-section (2) of section 47 of the Act, at or before the time at which the loan is made—
(a) by means of a written statement in the loan agreement or proposed agreement between the bank or financial institution and the borrower; or
(b) through a separate statement in writing.
9. Payment, credit or charge card
(1) A bank or financial institution shall disclose to each holder of a payment, credit or charge card, at or before the time at which the card is issued—
(a) the particulars of the holder’s rights and obligations relating to—
(i) the credit limit authorised under the card and the maximum amount of indebtedness that may be outstanding at any time;
(ii) the period of time for which each statement of account is issued;
(iii) the manner, if any, in which the holder may use the card and avoid any charge;
(iv) the minimum amount, if any, that must be paid at the end of each statement period, which amount may be stated as a percentage of the amount outstanding; and
(v) the maximum amount of the card-holder’s liability for authorised use of the card where it is lost or stolen;
(b) the amount of any charge for which the holder is responsible by reason of accepting or using the card and the manner in which the charge is calculated;
(c) the cost of borrowing and the manner in which it is calculated; and
(d) any charges or penalties to be paid by the borrower as a result of the failure to repay or pay in accordance with the contract governing the loan.
(2) Where a bank or financial institution intends to change any of the matters disclosed to a card-holder in accordance with sub-regulation (1), other than a disclosure under clause (i) of paragraph (a), the bank or financial institution shall send or deliver to the card-holder a written statement of the change at least 14 days before the effective date of the change.
10. No charge or penalty for failure to pay
(1) A bank or financial institution shall not impose on a borrower any charge or penalty as a result of the failure by the borrower to repay or pay in accordance with the contract governing the loan other than—
(a) interest on an overdue payment on a loan;
(b) legal costs incurred in collecting or attempting to collect a payment on a loan; or
(c) costs, including legal costs, incurred in protecting or realising the security on a loan.
(2) A bank or financial institution shall not impose a charge or penalty on a borrower for making a pre-payment of the principal or an instalment of the principal before its due date where—
(a) the amount of the repayment exceeds fifty thousand kwacha or extinguishes the debt;
(b) the loan is made to a natural person; and
(c) the loan is not secured by a mortgage on real property.
A bank or financial institution may disclose an estimate of an amount or of other information required to be disclosed under these Regulations instead of the actual amount or information where—
(a) at the time of disclosure, the amount or information is unknown or unavailable to the bank or financial institution;
(b) the bank or financial institution has made all reasonable efforts to ascertain the amount or information;
(c) the estimate is clearly identified as such; and
(d) the estimate is based on the best information available.
[Regulation 6]
CONTENTS OF DISCLOSURE STATEMENT
1. The name and address of the bank or financial institution.
2. The name and address of the borrower.
3. A description of any property to be used as security and its location.
4. A description of any guarantees and/or other collateral.
5. The date when the first payment on the loan is due.
6. In case of a mortgage, whether it is first, second, etc.
7. The principal of the loan, including—
(a) the total amount of all charges to be financed; and
(b) the net amount of money to be paid to the borrower or to be disbursed at the borrower’s direction.
8. The rate of interest expressed as a rate per annum, if that rate does not vary.
9. The initial rate of interest expressed as a rate per annum, if the rate varies from time to time.
10. A description of any factors that would cause the rate of interest to vary.
11. The length of the term of the loan.
12. The period during which an offer letter to a customer is valid, before it expires.
13. A description of any factors that would cause the term of the loan to vary.
14. The total cost of borrowing over the term of the loan, expressed as a rate per annum.
15. A list of each charge to be financed.
16. A description of any terms and conditions applicable to pre-payment of the principal.
17. A description of any charge or penalty that would be imposed for failure to make a payment or to repay the loan when due.
18. The date of the statement.
19. The name and signature of the representative of the bank or financial institution.
BANKING AND FINANCIAL SERVICES (PAYMENT OF FEES) REGULATIONS
[Sections 124, 4, 10, 13 and 22]
Arrangement of Regulations
Regulation
1. Title
2. Fees
3. Method of payment of fees
4. Fees non-refundable
5. Annual licence fee
6. Penalty for failure to pay a fee
7. Fees and penalties to accrue to bank of Zambia
[Regulations by the Minister]
SI 180 of 1995.
These regulations may be cited as the Banking and Financial Services (Payment of Fees) Regulations.
The fees set out in the Schedule, shall be paid in respect of the services set out in that Schedule.
Fees payable under these Regulations shall be paid by a bank certified cheque, postal order or money order in favour of the bank of Zambia, provided that such payments may be allowed where the fee is delivered by hand.
The fees paid under these Regulations shall not be refundable.
(1) A bank or financial institution which is operational during the month of January of a particular year shall pay the annual licence fee not later than the 31st of January of that year.
(2) A bank or financial institution which is registered after the 31st of January of a particular year shall, before the end of the month in which it is so registered, pay a proportion of the annual licence fee equivalent to the number of full months it would be in operation for that year, multiplied by the annual licence fee.
6. Penalty for failure to pay a fee
A bank or financial institution which fails to pay the full amount of the applicable licence fee prescribed for a particular period shall, in addition to such licence fee, pay for each month or part thereof during which it remains in contravention, a penalty calculated at the rate of 20 per centum of the licence fee remaining unpaid from the date the payment became due.
7. Fees and penalties to accrue to bank of Zambia
Fees and penalties collected under these Regulations shall accrue to the bank of Zambia and shall be used for the benefit of the bank of Zambia.
[Regulation 2]
Fee Units
1. Application for a licence to conduct banking services
50,000
2. Application for a licence to conduct a regulated financial service business
30,000
3. Annual licence fee-banking business
25,000
4. Annual licence fee-financial service business
15,000
5. Inspection of the Register of Banks and Financial Institutions
10,100
BANKING AND FINANCIAL SERVICES (RETURN OF UNCLAIMED FUNDS) REGULATIONS
[Sections 124 and 76]
Arrangement of Regulations
Regulation
1. Title
2. Annual returns of unclaimed funds
3. Computation of the period
4. Content of return
5. Amounts under ten thousand kwacha
[Regulations by the Minister]
SI 181 of 1995.
These Regulations may be cited as the Banking and Financial Services (Return of Unclaimed Funds) Regulation.
2. Annual returns of unclaimed funds
A bank or financial institution shall, within 60 days of the end of each calendar year, submit to the Registrar annual returns in the form set out in the First and Second Schedules, in respect of all funds in Zambian currency in that bank or financial institution for which no transaction has taken place and no statement of account has been requested or acknowledged by the person in whose name the funds were being held, for a period of 10 years or more.
The period of 10 years referred to in regulation 2 shall commence—
(a) in the case of a deposit made for a fixed period, from the day on which the fixed period terminated; or
(b) in the case of other funds, from the day on which the last transaction by customer took place or a statement of account was last requested or acknowledged by the person in whose name the funds were held, whichever is the later.
An annual return made under regulation 2 shall indicate, in so far as is known to the bank or financial institution—
(a) the name of each person for whom funds are held;
(b) the recorded address of each person for whom funds are held;
(c) the classification of funds;
(d) the outstanding amount;
(e) the date on which the bank last transaction took place in respect of the funds; and
(f) the branch of the bank or financial institution in which transactions took place in respect of these funds.
5. Amounts under ten thousand kwacha
The information required under regulation 4 may be excluded from the annual returns when the total amount outstanding in the name of a person is less than ten thousand kwacha.
[Regulation 2]
RETURN OF UNCLAIMED FUNDS
[Section 76(2)]
Name of the Bank.............................................................................................................................................
This return relates to the calendar year ended 31st December, 20...........
|
1. Total amount of items reported in detail on attached sheets numbered 1 to ........................................... of Second Schedule |
K................................... |
|
2. Total of accounts and instruments under K1,000 not reported in detail |
K................................... |
|
3. Interest accrued on interest bearing accounts not added to individual accounts |
K................................... |
|
4. Total amount of unclaimed funds as at 31st December, 20........ |
K................................... |
We declare that, having regard to the latest information available to us, this return is, to the best of our knowledge and belief, correct according to the books and records of the bank and presents fairly the information required by the Banking and Financial Services Act.
|
................................... |
................................... |
|
Signature |
Title |
|
................................... |
................................... |
|
Signature |
Title |
Dates at .............................................................................. this.......................day of........................ 20.....
[Regulation 2]
Return of unclaimed funds (section 76(2)) for calendar year ended 31st December, 20............
Name of bank ..............................................
|
Name of person |
Address |
Classification |
Amount outstanding |
Date |
Branch Address |
(1) Classify as a, b or c according to the following—
(a) Demand, savings or matured time deposit (section 76(1)(a));
(b) Funds paid toward the purchasing of a share or other interest in a security issued by the bank (section 76(1)(b));
(c) Funds or other personal property tangible or intangible removed from a safekeeping facility (section 76(1)(c)).
BANKING AND FINANCIAL SERVICES (RESERVE ACCOUNT) REGULATIONS
[Sections 69 and 124]
Arrangement of Regulations
Regulation
1. Title
2. Interpretation
3. Transfers to a reserve fund
[Regulations by the Minister]
SI 182 of 1995.
These Regulations may be cited as the Banking and Financial Services (Reserve Account) Regulations.
In these Regulations, unless the context otherwise requires—
"reserve fund" means a fund of a bank or financial institution generated from actual earnings or by way of recoveries, or a surplus on the realisation of the scale of capital assets, but does not include any surplus resulting from a revaluation of assets.
3. Transfers to a reserve fund
A bank or financial institution shall maintain a reserve fund and shall, out of its retained earnings of distributable profits from the current financial year, before any dividend is declared, transfer to that fund a sum equal to not less than—
(a) 50 per centum of such profits, whenever the amount of the reserve fund does not exceed half of its paid-up equity capital; or
(b) 20 per centum of such profits or such sum as shall make the amount of the reserve fund equal to the paid-up equity capital, whenever the amount of the reserve fund exceeds half of its paid-up equity capital, but is less than the paid-up equity capital.
BANKING AND FINANCIAL SERVICES (DISCLOSURE OF DEPOSIT CHARGES AND INTEREST) REGULATIONS
[Section 47]
Arrangement of Regulations
Regulation
1. Title
2. Disclosure of charges
3. Disclosure of increased charge
4. Maintenance of list of charges
5. Disclosure of interest rates
6. Changes in rate of interest
7. Renewal of fixed term deposit account interest
8. Disclosure of advertisement
[Regulations by the Minister]
SI 183 of 1995.
These Regulations may be cited as the Banking and Financial Services (Disclosure of Deposit Charges and Interest) Regulations.
(1) A bank or financial institution shall, by means of a written statement, disclose to its customers and to the public all charges on deposit accounts with that bank or financial institution for any of the following services in respect of such deposit accounts, namely—
(a) acceptance of deposits;
(b) acceptance of coins, cheques or bank of Zambia notes for deposit;
(c) issuance of cheques;
(d) certification of cheques;
(e) handling of a cheque presented or issued by a customer that is subsequently returned because there are no sufficient funds, or for technical reasons such as where words and figures do not agree, etc;
(f) holding of a cheque for deposit;
(g) handling of a cheque or negotiable item, such as a draft or a money order drawn in a foreign currency;
(h) processing of a stop payment on a cheque or other instrument;
(i) handling of overdrafts;
(j) transfers between accounts;
(k) supplying of account statements;
(l) handling of account confirmations;
(m) conducting searches related to an account;
(n) providing information in regard to an account balance; and
(o) closing of an account.
(2) A bank or financial institution shall display and make available copies of the written statement referred to in sub-regulation (1) to customers and to the public at each branch of the bank or financial institution at which such account is kept.
(3) The written statement referred to in sub-regulations (1) and (2) may be in the form of a tariff and shall indicate that the statement—
(a) sets out all charges for services provided in respect of deposit accounts with the bank or financial institution; or
(b) does not set out all of the charges for services in respect of deposit accounts with the bank or financial institution and that charges for services not included in the statement shall be disclosed on request or at the time the service is offered.
3. Disclosure of increased charge
(1) Where a bank or financial institution increases a charge on a service referred to in sub-regulation (1) of regulation 2, it shall disclose the increased charge in a notice:
Provided that this regulation shall not apply to a customer who has agreed in writing that the bank or financial institution shall charge an amount, other than an amount required to be disclosed under sub-regulation (1) or regulation 2.
(2) The notice referred to in sub-regulation (1) shall be displayed for a period of at least 30 days immediately before the effective date of the increase at all branches of the bank or financial institution.
4. Maintenance of list of charges
A bank or financial institution shall—
(a) maintain, at each branch, a list of all charges applicable to deposit accounts and services provided by the bank or financial institution to its customers and to the public; and
(b) on request, make available at each branch the list requested to in paragraph (a) to its customers and to the public for inspection during business hours.
5. Disclosure of interest rates
(1) A bank or financial institution shall disclose to a person who wishes to open an interest bearing deposit account with it, the rate of interest applicable to the account and the manner in which the amount of interest shall be calculated.
(2) The disclosures referred to in sub-regulation (1) shall—
(a) be in writing, copies of which shall be made available and displayed in each branch of the bank or financial institution where such accounts are kept; or
(b) be made by way of a general notice displayed in each branch of the bank or financial institution where such account is kept.
(3) The disclosure referred to in sub-regulation (1) shall include—
(a) the annual rate of interest;
(b) the frequency of payment of interest;
(c) the manner, if any, in which the balance in the interest bearing deposit account will affect the rate of interest; and
(d) any other circumstances that affects the rate of interest.
6. Changes in rate of interest
Where there is a change in the rate of interest, or in the manner of calculating the amount of interest on an interest bearing deposit account, the bank or financial institution shall disclose the changes by means of—
(a) a written statement, delivered to the person in whose name the account is maintained;
(b) a written statement, copies of which are available and displayed in each branch of the bank or financial institution where such account is kept;
(c) a general notice that is displayed in each branch of the bank or financial institution where such account is kept; or
(d) an advertisement in a daily newspaper.
7. Renewal of fixed term deposit account interest
Where a bank or financial institution renews a fixed term deposit account, it shall disclose the rate of interest and the manner of calculating the amount of interest on the deposit account in accordance with sub-regulation (1) of regulation 5 and clauses (1) and (ii) of paragraph (b) of sub-regulation (2) of regulation 5.
8. Disclosure of advertisement
Where a bank or financial institution makes an advertisement in respect of interest bearing deposits or debt obligations, a bank or financial institution shall disclose how the amount of interest applicable to each deposit and debt obligation shall be calculated by clearly indicating in the advertisement—
(a) in respect of interest-bearing deposits, the manner, if any, by which the balance of the account shall affect the rate of interest; and
(b) any other circumstances that may affect the rate of interest.
BANKING AND FINANCIAL SERVICES (CAPITAL ADEQUACY) REGULATIONS
[Sections 83 and 84]
Arrangement of Regulations
Regulation
1. Title
2. Interpretation
3. Minimum capital of a bank
4. Minimum capital of a financial institution
5. Application of regulation 4 to subsidiary
6. Minimum capital ratio
7. Determination of regulatory capital
8. Primary or tier-one capital
9. Conditions for securities of subsidiaries to qualify as primary or tier-one capital
10. Secondary or tier-two capital
11. Failure to meet preferred dividend payment not to constitute grounds for bankruptcy
12. Conditions for securities of subsidiaries to qualify as secondary or tier-two capital
13. Qualifications for inclusion in secondary or tier-two capital
14. Bank’s opinion to be sought
15. Submission of state of affairs and results of operations to bank
16. Components of primary or tier-one capital
17. Components of secondary or tier-two capital
18. Deductions from primary or tier-one capital
19. Limitations and restrictions
20. Amortisation of outstanding balances
21. Risk weighted assets
22. Guarantees made by bank
23. Implements of capital adequacy standards
24. Calculation of risk weighted assets
25. Capital deficiency
26. Suspension of banks or financial institutions, branch networks, etc.
27. Suspension of director
28. Maintenance of records
29. Consolidated reports
30. Submission of reports
[Regulations by the Minister]
SI 184 of 1995.
These Regulations may be cited as the Banking and Financial Services (Capital Adequacy) Regulations.
In these Regulations, unless the context otherwise requires—
"associate" means a company in which more than 20 per cent but not more than 50 per cent of the outstanding voting shares (except any qualifying directors’ shares) are owned directly or indirectly by the reporting bank or financial institution and the business activities and financial affairs of which the reporting bank or financial institution or its subsidiaries are able to materially influence;
"capital deficiency" means a shortfall in the minimum capital required by these Regulations;
"common shareholders equity" includes common shares and related contributed surplus, retained earnings, general reserves and the statutory reserve fund;
"goodwill" means the difference between cost and the acquired company’s interest in the identifiable net assets;
"off-balance sheet risks" means all items not shown on the balance sheet where the bank’s or financial institution’s capital is potentially at risk, and includes letters of credit, guarantees, commitments to re-purchase loans or securities, acceptances, performance bonds and other items deemed to constitute credit risk by the bank of Zambia;
"regulatory capital" means instruments comprising the capital resources of a bank or financial institution, and the total of which is used by the bank of Zambia for compliance by a bank or financial institution with the minimum capital standard and for assessing capital adequacy;
"general reserves" means an appropriation of retained earnings to reflect additional potential losses based on an assessment of the bank’s overall situation by management;
"revaluation reserves" means the increment in the recorded or book value of a bank or financial institution’s own premises, fixed assets or long term equity investments arising from a formal revaluation to reflect their current value or an amount closer to their current value than historical cost;
"subordinated debt" means a security which is, by its terms, subordinated in right of payment to all deposit liabilities and all other liabilities of the entity that issued the security other than liabilities that, by their terms, rank equally with, or are subordinated to, that security;
"subsidiary" means a company in which more than 50 per cent of the issued voting shares of the company (except any qualifying director’s shares) are owned directly or indirectly by the reporting bank or artificial institution.
(1) Every bank shall commence operations with primary paid-up capital of not less than two thousand million kwacha, or such other higher amount as may be prescribed by the bank of Zambia from time to time and shall maintain this minimum amount at all times.
(2) A bank which does not meet the minimum capital requirement at the coming into force of these Regulations shall enter into negotiations with the bank of Zambia to progressively build up its primary capital to at least one billion, two-hundred and fifty million kwacha by not later than 30th June, 1996, and to two billion by 31st December, 1996.
4. Minimum capital of a financial institution
(1) Every financial institution shall, subject to such other higher amounts as may be prescribed by the bank of Zambia commence operations with primary paid-up capital of not less than, for—
(a) deposit-taking institutions, two thousand million kwacha;
(b) leasing companies, two-hundred and fifty million kwacha; and
(c) other types of financial institutions, an amount prescribed by the supervisory authority, to be not less than twenty-five million kwacha;
and shall maintain that minimum amount at all times.
(2) A financial institution which is operational at the coming into force of these Regulations which does not meet the applicable minimum capital requirement at the coming into force of these Regulations shall enter into negotiations with the bank of Zambia to progressively build up its primary capital to at least the level prescribed by the bank of Zambia by not later than 12 months after these Regulations come into force.
5. Application of regulation 4 to subsidiary
Regulation 4 applies to a bank or financial institution which is a subsidiary of an adequately capitalised bank or other financial institution, irrespective of the amount of control exercised by the holding bank.
(1) Every bank and financial institution shall at all times maintain a minimum total capital equivalent of not less than 10 per cent of its total risk-weighted assets and off-balance sheet exposures.
(2) Primary or tier-one capital shall be a minimum of five per cent of the bank’s or financial institution’s total risk-weighted assets.
(3) A bank or financial institution operating at or near the level referred to in sub-regulation (2) but which has serious weaknesses in the quality of its assets, diversification of risk, liquidity or earnings, shall maintain capital levels well in excess of those prescribed in sub-regulation (1).
7. Determination of regulatory capital
(1) In determining which funds should be included in the capital base of a bank or financial institution for purposes of the required minimum capital and for measuring capital adequacy, three criteria shall be considered, namely—
(a) permanence;
(b) being free of mandatory fixed charges against earnings; and
(c) the subordinated legal position to the rights of depositors and other creditors of the bank or financial institution.
(2) Regulatory capital shall be determined in accordance with the Second Schedule.
8. Primary or tier-one capital
For purposes of assessing capital adequacy for regulatory purposes, a bank’s or financial institution’s primary or tier-one capital includes—
(a) common shareholders’ equity; and
(b) the following categories of preferred shares—
(i) perpetual preferrers;
(ii) compulsory convertible preferrers, where conversion to securities which would qualify as primary capital represents the only redemption option; and
(iii) preferrers which have an original term to maturity of 20 years or more, where no redemption occurs within the first 10 years, and where the maximum redemption obligation in any one year is restricted to 5 per cent or less of the original amount.
9. Conditions for securities of subsidiaries to qualify as primary or tier-one capital
Minority interests or common shareholders’ equity attributable to consolidated subsidiaries shall qualify as primary or tier-one capital if they possess the three essential criteria for capital and shall be designated as a legitimate add-on component of the consolidated primary or tier-one capital.
10. Secondary or tier-two capital
For purposes of assessing capital adequacy for regulatory purposes, a bank’s or financial institution’s secondary or tier-two capital includes preferred shares issued by a bank or financial institution which meet the requirements under regulation 13.
11. Failure to meet preferred dividend payment not to constitute grounds for bankruptcy
Failure by a bank or financial institution to meet a preferred dividend payment shall not constitute grounds for bankruptcy, but an omission or an interest payment on any form of debt shall constitute grounds for bankruptcy.
12. Conditions for securities of subsidiaries to qualify as secondary or tier-two capital
Notwithstanding the separate legal status of secondary or tier-two capital, securities of subsidiaries shall qualify for inclusion in consolidated secondary or tier-two capital for measuring capital adequacy for regulatory purposes, provided that—
(a) there are no parent guarantees or other contractual features governing the issue that could in effect rank the investors’ claims equal to or ahead of the claims of depositors; and
(b) they are fully subordinated to the other liabilities of the subsidiary;
(c) they meet the minimum criteria referred to in paragraph (b) of sub-regulations (1) and (3) of regulation (13) for qualifying debentures.
13. Qualifications for inclusion in secondary or tier-two capital
(1) A preferred share shall qualify as secondary or tier-two capital if—
(a) there is subordination to all of the deposit obligations of the bank; and
(b) it has an initial term greater than five years, with no redemptions permitted in the first five years.
(2) A share referred to in sub-regulation (1) may be redeemed before maturity only with the prior written approval of the bank of Zambia.
(3) A loan stock or capital and other subordinated debentures issue shall not be included in secondary capital unless it meets the standards set in sub-regulation (1) and is free of restrictive covenants which could potentially interfere with a bank’s or financial institution’s ability to conduct normal banking operations, such as covenants mandating accelerated redemption in the event of failure to meet particular earnings coverage tests or in the event of missing dividend.
14. Bank’s opinion to be sought
Any bank or financial institution intending to issue capital instruments shall seek the opinion of the bank of Zambia as to whether or not these instruments qualify as capital.
15. Submission of state of affairs and results of operations to bank
(1) For purposes of determining adequacy under these Regulations, a bank or financial institution shall submit to the bank of Zambia its state of affairs, and the results of its operations and those of all of its subsidiaries and associates which conduct banking or financial services business.
(2) A bank or financial institution shall provide the bank of Zambia with details of the activities of each subsidiary and associate to enable the bank of Zambia to verify which enterprises, if any, should not be considered.
16. Components of primary or tier-one capital
Primary or tier-one capital includes—
(a) paid-up common shares;
(b) qualifying preferred shares referred to in regulation (8);
(c) contributed surplus (including premium on issues of shares, less any payments of premium on redemption; and capital contribution by shareholders without the issuance of shares);
(d) retained earnings;
(e) general reserves;
(f) statutory reserves; and
(g) minority interests (in the equity of subsidiaries which are less than wholly owned).
17. Components of secondary or tier-two capital
Secondary or tier-two capital is composed of residual financial instruments which possess some of the features of capital and which meet the standards set out in regulation (13) and any other form of capital as may be determined and announced by the bank of Zambia, and includes—
(a) forty per cent of the reserves arising from the revaluation of tangible fixed assets;
(b) subordinated term debt, or loan stock or capital with a minimum original term of maturity of over five years, subject to a straight-line amortisation during the last five years leaving no more than 20 per cent of the original amount outstanding in the final year before redemption; and
(c) other instruments or forms of capital which the bank of Zambia may allow:
Provided that no part of accumulated goodwill shall be considered as capital.
18. Deductions from primary or tier-one capital
In determining the amount of available capital for purposes of computing the minimum capital and the capital ratio required under these Regulations, the following items shall be deducted from the amount of capital derived under regulations 16 and 17—
(a) goodwill and other intangible assets;
(b) investments in unconsolidated subsidiaries and associates where the bank or financial institution has a direct and indirect ownership of 20 per cent or more;
(c) lending of a capital nature to subsidiaries and associates;
(d) holdings of other banks’ or financial institutions’ capital instrument; and
(e) the value of assets pledged to secure liabilities if such assets are not available to meet the liabilities of the bank or financial institution.
19. Limitations and restrictions
In computing the minimum total capital required under regulation 6—
(a) part of revaluation reserves shall not be considered as primary capital;
(b) the total of secondary or tier-two capital shall be limited to a maximum of 100 per cent of primary or tier-one capital;
(c) revaluation reserves shall only qualify as secondary capital if—
(i) they relate to the revaluation of long-term investments and immovable fixed assets which have been formally identified as strategic long-term investments by the board of directors of the bank of financial institutions;
(ii) the revaluation is made by an independent appraiser or another appropriate independent party, whose qualifications are considered appropriate by the respective bank’s auditors, at intervals in accordance with the accounting policy of the reporting institution and generally accepted accounting practice;
(iii) the assets being revalued are of a similar nature, e.g., investments in premises, and the revaluation of all such assets is undertaken at the same time;
(iv) a reduction in the value of any such assets is taken into account where current market values are no longer supportive of balance sheet values; and
(v) details of all such revaluations are disclosed in the annual financial statements of the reporting institution.
20. Amortisation of outstanding balances
(1) Eligible supplementary capital described in sub-regulation (b) of regulation 17 components shall be subject to straight-line amortisation in the final five years prior to maturity or the effective dates governing shareholders’ retraction rights.
(2) When subordinated debentures and qualifying subsidiary debt instruments approach maturity, redemption or retraction, outstanding balances shall be amortised on the basis of the following criteria—
|
YEARS TO MATURITY |
AMOUNT IN CAPITAL INCLUDED |
|
five years or more |
100% |
|
four years but less than five years |
80% |
|
three years but less than four years |
60% |
|
two years but less than three years |
40% |
|
one year but less than two years |
20% |
|
Less than one year |
0% |
(1) For the purposes of this regulation, risk assets in relation to a bank or financial institution mean assets that are normally recorded on the balance sheet and obligations which are assumed by the bank or financial institution and which are recorded off-balance sheet.
(2) For the purposes of calculating the risk-weighted capital ratio, risk assets are classified into the following categories—
(a) cash and equivalent items, generally considered riskless, carrying a risk weight of zero per cent;
(b) assets with little risk and a high degree of liquidity, carrying a risk weight of 20 per cent;
(c) assets with a moderate degree of risk and having more credit and liquidity risk than those in paragraphs (a) and (b), carrying a risk weight of 50 per cent;
(d) the remaining assets typically found in the portfolio of a bank or financial institution, carrying a risk weight of 100 per cent.
(3) Assets and their associated risk weights are as set out in Parts I and II of the First Schedule.
(1) Any guarantees made by a bank or financial institution applicable to the liabilities of a subsidiary and which are already incorporated into the consolidated balance sheet shall be excluded to avoid double counting.
(2) The inclusion for off-balance sheet items shall apply to arms’ length contingent liabilities of the bank or financial institution and its subsidiaries, and shall exclude corresponding inter-company commitments.
23. Implements of capital adequacy standards
The bank of Zambia shall, in implementing capital adequacy standards, do so on an individual institution basis and shall rely on the criteria set out below—
(a) the size of the institution;
(b) the diversification of its assets and liabilities;
(c) degree of risk exposures;
(d) level of profitability; and
(e) management strength including liquidity management.
24. Calculation of risk weighted assets
The total risk-weighted assets of each bank or financial institution shall be determined by multiplying the outstanding book value of its assets, net of allowance for losses and depreciation, by the prescribed risk weight factors of such assets, and aggregating the risk adjusted values of those assets following the format shown in Parts I and II of the First Schedule.
If the bank of Zambia, after conducting a review of both on and off-balance sheet risks, finds that a bank or financial institution has insufficient capital to meet the requirements under regulation 6, the bank of Zambia, in accordance with its powers to correct unsafe and unsound practices under section 77 of the Act, shall direct that such bank or financial institution effect an increase of its capital or a reduction of its assets and off-balance sheet exposures, within a period of three months.
26. Suspension of banks or financial institutions, branch networks, etc.
(1) Any bank or financial institution which, for a continuous period of 14 days, incurs capital deficiencies shall automatically stop to grant new loans and other credit facilities, including the issuance of letters of credit and guarantees, without the prior approval of the bank of Zambia.
(2) A bank or financial institution to which sub-regulation (1) applies shall have its branch network and all capital expenditures suspended.
(3) The suspension of a bank’s or financial institution’s lending privilege, branch expansion and capital expenditures shall remain in force for as long as the bank or financial institution is unable to increase its capital or reduce its assets or off-balance sheet exposures as directed by the bank of Zambia, or to restructure its balance sheet risks to the satisfaction of the bank of Zambia.
(1) Any director, officer or employee of a bank or financial institution who sanctions or votes for the approval of any loan or credit facility, branch expansion or capital expenditure while the bank remains under suspension as provided under regulations 25 and 26 shall be considered automatically suspended from office.
(2) The suspension referred to in sub-regulation (1) shall be without prejudice to any other punitive measures which may be applied against the director, officer or employee and which have been provided for in the Act.
Every bank and financial institution shall maintain suitable records to facilitate verification of its capital position.
For the purpose of computing its capital position, the principal office of each bank or financial institution in Zambia, all of its branches, agencies, subsidiaries, and associated companies regardless of country of domicile, shall be considered as a single unit.
Every bank and financial institution shall—
(a) submit to the bank of Zambia a monthly report on its capital position within 21 days following the reference month, in the form set out in the First and Second Schedules; and
(b) require its external auditors—
(i) to compute its capital position at the end of each financial year taking into account the requirements of the Act and all relevant prudential guidelines and regulations issued by the bank of Zambia; and
(ii) to render a statement to the bank or financial institution on the adequacy or inadequacy of its capital and send a copy to the bank of Zambia.
[Regulations 21 and 24]
PART I
CALCULATION OF RISK-WEIGHTED ASSETS
Name of Bank/Financial Institution ................................................................................................................. As at ...................................................................................................................................................................
(1) Risk weight %
(2) Balance (Net
of allowance
for losses)
(K millions)
(3) Risk-
Weighted
assets (1 ´ 2)
(K million)s
ASSETS
>
>Notes and Coins
>
>
-Zambian notes and coins
0
>
>
-other notes and coins
0
>
>Balances held with the bank of Zambia
>
>
-statutory reserves
0
>
>
-other balances
0
>
>Balances held with commercial banks in Zambia
>
>
-with residential maturity of up to twelve months
20
>
>
-with residential maturity of more than twelve months
100
>
>Abroad
>
>
-with residential maturity of up to twelve months
20
>
>
-with residential maturity of more than twelve months
100
>
>Assets in transit
>
>
-from other commercial banks
50
>
>
-from branches of reporting bank
20
>
>Investment in debt securities
>
>
-treasury bills
0
>
>
-other government securities
20
>
>
-issued by local Government units
100
>
>
-Private securities
100
>
>Bills of exchange
>
>
-portion secured by cash or treasury bills
0
>
>
-others
100
>
>Loans and advances
>
>
-portion secured by cash or treasury bills
0
>
>
-loans to or guaranteed by the Government of Zambia
50
>
>
-loans repayable in instalments and secured by a mortgage on owner-occupied residential property
50
>
>
-loans to or guaranteed by local Government units
100
>
>
-loans to parastatals
100
>
>
Inter-bank advances and loans/advances guaranteed by other banks
>
>
-with a residual maturity of twelve months
20
>
>
-with a residual maturity of more than twelve months
100
>
>Bank premises
100
>
>Acceptances
100
>
>Other assets
100
>
>Investment in equity of other companies
100
>
>Total risk-weighted assets
>....................
....................
>
(on-balance sheet)
>....................
....................>
PART II
OFF-BALANCE SHEET OBLIGATIONS
| > |
>
(1)
Risk weight %
(2)
Balance (Net of allowance for losses)
(K millions)
(3)
Risk-
Weighted assets (1 ´ 2)
(K million)s
Letters of Credit
-sight import Letters of credit
20
-portion secured by cash/treasury bills
0
-standby letters of credit
100
-portion secured by cash/treasury bills
0
-export Letters of credit confirmed
20
Guarantees and indemnities
-guarantees for loans, trade and securities
100
-portion secured by cash/treasury bills
0
-performance bonds
50
-portion secured by cash/treasury bills
0
-securities purchased under resale agreement
100
-other contingent liabilities
100
-net open position in foreign currencies
100
Total risk-weighted assets
>....................>
>....................
>
(off-balance sheet)
Total risk-weighted assets
>....................>
>....................
>
(on- and off-balance sheets)
>....................>
>....................>
[Regulation 7]
COMPUTATION OF CAPITAL POSITION
As at..............................................................
Name of bank/financial institution
..............................................................
|
I. Primary (tier-one) capital |
(K millions) |
|
(a) paid-up common shares |
................................................ |
|
(b) eligible preferred shares |
................................................ |
|
(c) contributed surplus |
................................................ |
|
(d) retained earnings |
................................................ |
|
(e) general reserves |
................................................ |
|
(f) statutory reserves |
................................................ |
|
(g) minority interests (common shareholders’ equity) |
................................................ |
|
(h) sub-total |
................................................ |
|
Less |
|
|
(i) goodwill and other intangible assets |
|
|
(j) investments in unconsolidated subsidiaries and associates |
|
|
(k) lending of a capital nature to subsidiaries and associates |
|
|
(l) holding of other bank’s or financial institution’s capital instruments |
|
|
(m) assets pledged to secure liabilities |
|
|
(n) Sub-total |
|
|
(o) total primary capital (h-n) |
|
|
II. Secondary (tier-2) capital |
|
|
(a) eligible preferred shares (regulations 13 and 17) |
|
|
(b) eligible subordinated term debt (regulation 23(b)) |
|
|
(c) eligible loan stock\capital (regulation 23(b)) |
|
|
(d) revaluation reserves (regulation 23(a)) |
|
|
(e) other (regulation 23(c)) specify |
|
|
(f) total secondary capital |
|
|
III. Eligible secondary capital |
|
|
(the maximum amount of secondary capital is limited to one hundred per cent of primary capital) |
|
|
IV. Eligible total capital (I (o) + III) |
|
|
(Regulatory capital) |
|
|
V. Minimum capital requirement: |
|
|
(ten per cent of total on- and off-balance sheet risk-weighted assets as established in the First Schedule, or K two thousand million, whichever is the higher) |
|
|
VI. Excess (deficiency) (IV minus V) |
BANKING AND FINANCIAL SERVICES (FIXED ASSETS INVESTMENT) REGULATIONS
[Section 124]
Arrangement of Regulations
Regulation
1. Title
2. Interpretation
3. Prohibition of investments without bank of Zambia approval
4. Approval before investment in fixed assets
5. Covering of excess assets
6. Fixed assets to be booked at cost
7. Method of depreciation of assets
8. Capitalisation of leases
9. Penalty for contravening regulations
10. Report on fixed assets
[Regulations by the Minister]
SI 185 of 1995.
These Regulations may be cited as the Banking and Financial Services (Fixed Assets Investment) Regulations.
In these Regulations, unless the context otherwise requires—
"fixed assets of a bank or financial institution" include bank premises (including land), furniture, fixtures, equipment and vehicles, whether such assets are owned or leased, and any leasehold improvements;
"primary capital" includes—
(a) paid up common shares;
(b) the following qualifying preferred shares;
(i) perpetual preferreds;
(ii) compulsory convertible preferreds, where conversion to securities which would qualify as primary capital represents the only redemption option; and
(iii) preferreds which have an original term to maturity of 20 years or more, where no redemption occurs within the first 10 years, and where the maximum redemption obligation in any one year is restricted to 5 per cent or less or the original issued amount;
(c) contributed surplus (including premium on issues of shares, less any payments of premium on redemption; and capital contribution by shareholders without the issuance of shares);
(d) retained earnings;
(e) general reserves;
(f) statutory reserves; and
(g) minority interests (in the equity of subsidiaries which are less than wholly owned);
"secondary capital" means residential financial instruments that possess some of the features of capital and which meet the standards set out in regulation 13 of the Banking and Financial Services (Capital Adequacy) Regulations, and any other form of capital as may be determined and announced from time to time by the bank of Zambia, and, subject to a limit which shall not exceed 100 per cent of primary capital and includes the following—
(a) forty per cent of the reserves arising from the revaluation of tangible fixed assets;
(b) subordinated term debt, or loan stock or capital with a minimum original term of maturity of over 5 years, subject to a straight-line amortisation during the last 5 years leaving no more than 20 per cent of the original amount outstanding in the final year before redemption;
(c) other instruments or forms of capital which the bank of Zambia may allow, provided that no part of accumulated goodwill shall be considered as capital;
"regulatory capital" means those instruments which comprise the capital resources of a bank or financial institution, and the total of which is used by the bank of Zambia for compliance by a bank or financial institution with the minimum capital standard and for assessing capital adequacy, and is calculated in accordance with the Second Schedule of the Banking and Financial Services (Capital Adequacy) Regulations.
3. Prohibition of investments without bank of Zambia approval
A bank or financial institution shall not, without the approval of the bank of Zambia—
(a) invest directly in fixed assets;
(b) invest in the stock, bonds, debentures or obligations of any corporation holding the fixed assets of such bank or financial institution; or
(c) make loans to or on the security of the stock of any such corporation;
if the aggregate of all such investments and loans exceed the amount of the regulatory capital of such bank or financial institution.
4. Approval before investment in fixed assets
A bank or financial institution shall obtain the approval of the bank of Zambia before making any investment in fixed assets which will result in all such investments exceeding the amount of its regulatory capital.
Where a bank or financial institution whose fixed assets exceed regulatory capital at the coming into force of these Regulations, such excess shall be covered, within a reasonable period of time to be determined by the bank of Zambia, either by a reduction of such assets or an increase in the capital which will result in its fixed assets being in compliance with these Regulations.
6. Fixed assets to be booked at cost
All fixed assets acquired by a bank or financial institution shall be booked at cost, and shall be stated in the balance sheet of the bank or financial institution at cost less accumulated depreciation or amortisation.
7. Method of depreciation of assets
For book purposes, a bank or financial institution shall depreciate assets over their useful life, using a straight line method.
(1) A bank or financial institution shall capitalise all leases relating to fixed assets in its report to the bank of Zambia.
(2) In reports to the bank of Zambia, the Bank shall require that the amount of all leases pertaining to fixed assets obligations be capitalised.
(3) The amount capitalised under sub-regulation (2) shall be the present value of the minimum required payments over the non-cancellable term of the lease and the rate of interest shall be not more than the bank or financial institution’s prime lending rate.
9. Penalty for contravening regulations
A bank or financial institution which contravenes these Regulations shall be liable to a penalty of one thousand penalty units per day for the period during which the contravention continues.
(1) A bank or financial institution shall report, twice a year to the bank of Zambia, as at the end of June and December, the amount of its fixed assets and how these relate to regulatory capital.
(2) The report referred to in sub-regulation (1) shall be made in the form set out in the Schedule.
[Regulation 2]
STATEMENT OF INVESTMENTS IN FIXED ASSETS OF A BANK OR FINANCIAL INSTITUTION INCORPORATED IN ZAMBIA
|
Name of Bank/Financial Institution |
(K’000) |
|
|
............................................................................................. |
||
|
At close of business .......................................... on 20...... |
||
|
1. Total regulatory capital |
||
|
(As calculated by using the Second Schedule of the Banking and Financial Services (Capital Adequacy) Regulations. Attach calculation.) |
|
|
|
2. Fixed assets— |
||
|
(a) bank premises (including land) |
.................. |
|
|
(b) furniture and fixtures |
.................. |
|
|
(c) Equipment |
.................. |
|
|
(d) Vehicles |
.................. |
|
|
(e) leasehold improvements |
.................. |
|
|
(f) other |
.................. |
|
|
Total |
.................. |
|
|
3. Investments in corporation holding fixed assets of the reporting bank or financial institution— |
||
|
(a) Stock |
.................. |
|
|
(b) Bonds |
.................. |
|
|
(c) Debentures |
.................. |
|
|
(d) Obligations |
.................. |
|
|
Total |
.................. |
|
|
4. Advanced/loans made to or on the security of the stock of the reporting bank or financial institution— |
||
|
(a) Advances |
.................. |
|
|
(b) Loans |
.................. |
|
|
Total |
.................. |
|
|
5. Total investment in fixed assets (Items 2 + 3 + 4) |
.................. |
|
|
6. Total regulatory capital (line 1) a percentage of fixed assets (line 5) |
.................. |
|
|
Authorised Signature........………….. Authorised Signature ....................... |
BANKING AND FINANCIAL SERVICES (FOREIGN EXCHANGE RISK MANAGEMENT AND EXPOSURE) REGULATIONS
[Section 124]
Arrangement of Regulations
> Regulation
1. Title
2. Interpretation
3. Application
4. Foreign exchange risk management plan
5. Foreign exchange risk management policies
6. Foreign exchange risk management and control procedures
7. Foreign exchange exposure limits
8. Overall currency exposure
9. Single currency exposure
10. Submission of reports
[Regulations by the Minister]
SI 57 of 1996.
These Regulations may be cited as the Banking and Financial Services (Foreign Exchange Risk Management and Exposure) Regulations.
In these Regulations, unless the context otherwise requires—
"currency" means the legal tender of any country and includes precious metals and other similar tradable commodities;
"fixed forward contract" means a foreign exchange bought or sold forward in advance for delivery on a fixed value date longer than spot, at a pre-determined specified rate of exchange;
"option forward contract" means a forward exchange contract which gives the counterparty the right to exercise the contract over a defined period instead of solely on one value date;
"foreign exchange option contract" means a contract which gives the holder the right, but not the obligation, to sell or buy an agreed sum of money on an agreed date, or at any time between agreed dates at an agreed price or rate, on payment of a non-refundable fee or premium to the writer of the option;
"long position" means the excess of assets over liabilities in a particular currency;
"net forward position" means all amounts to be received less all amounts to be paid in the future as a result of foreign exchange transactions which have already taken place;
"open position" means a situation where assets in a particular currency do not equal liabilities in that currency, including unhedged forward commitments to purchase or sell the currency;
"overnight position" means the holdings of any open positions in foreign currencies of a bank or financial institution at the close of each business day;
"regulatory capital" means those instruments which comprise the capital resources of a bank or financial institution, and the total of which is used by the bank of Zambia for compliance by a bank or financial institution with the minimum capital standard and for assessing capital adequacy, and is calculated in accordance with the Second Schedule to the Banking and Financial Services (Capital Adequacy) Regulations;
"short position" means the excess of liabilities over assets in a particular currency;
"sport exchange rate" means the latest market price for a currency;
"spot foreign exchange contract" means an agreement with a counterparty to buy or sell a given amount of one currency against the agreed counter value of another, usually for settlement in two working days’ time.
These Regulations shall apply to all banks and financial institutions licensed under the Act.
4. Foreign exchange risk management plan
(1) Every bank or financial institution shall manage its foreign exchange risk exposures within the framework of a comprehensive risk management plan, setting out its policies, procedures and other safeguards necessary to prudently manage and control exposure to foreign exchange risk.
(2) The risk management plan referred to in sub-regulation (1) shall be drawn in the context of other risks and considerations and shall—
(a) take into account the ability of the bank or financial institution to absorb a potential loss;
(b) at a minimum, include—
(i) the establishment and implementation of sound and prudent foreign exchange risk management policies; and
(ii) the development and implementation of appropriate and effective foreign exchange risk management and control procedures.
(3) The policies and control procedures referred to in sub-regulation (2) shall be reviewed and reassessed at least once in a year and shall be submitted to the board of directors of the bank or financial institution for review and approval.
(4) The bank or financial institution shall, after the policies and control procedures referred to in sub-regulation (3) have been dealt with by its board of directors in accordance with that sub-regulation, refer them to the bank of Zambia.
5. Foreign exchange risk management policies
Every bank or financial institution engaged or proposing to engage in foreign exchange activities shall set forth in its risk management plan a well-articulated policy of the objectives of its foreign exchange risk management strategy, and shall include, at a minimum—
(a) a statement of risk principles and objectives governing the extent to which the bank or financial institution is willing to assume foreign exchange risk;
(b) subject to the limits specified in regulation 7, explicit and prudent limits on the bank’s or financial institution’s exposure to foreign exchange risk;
(c) the currency or currencies in which the institution is prepared to incur exposure; and
(d) clearly defined levels of delegation of trading authorities.
6. Foreign exchange risk management and control procedures
(1) Every bank or financial institution engaged or proposing to engage in foreign exchange activities shall—
(a) as part of its risk management plan, develop, implement and oversee procedures to manage and control foreign exchange risk in accordance with its foreign exchange risk management policies; and
(b) be of a level of sophistication commensurate with the size, frequency and complexity of the institution’s foreign exchange activities.
(2) The foreign exchange risk management and control procedures referred to in sub-regulation (1) shall include, at a minimum—
(a) the use of accounting and management information systems to measure, monitor and reconcile, on a daily basis, foreign exchange positions, foreign exchange risk and foreign exchange gains or losses;
(b) regular monitoring and reporting techniques to senior management;
(c) controls governing the management of foreign currency activities; and
(d) regular independent inspections or audits to assess compliance with, and the integrity of, the foreign exchange policies and procedures.
7. Foreign exchange exposure limits
A Bank or financial institution’s foreign exchange positions and exposures shall be calculated in accordance with the First, Second and Third Schedules.
(1) The bank of Zambia may, where it considers that the financial institution of a bank or financial institution warrants a lower limit, prescribe such lower limit as it may consider appropriate.
(2) Notwithstanding sub-regulation (1), every bank or financial institution shall—
(a) maintain its overall foreign exchange risk exposure as at the close of each business day to a maximum of 25 per centum of its regulatory capital; and
(b) ensure that its intra-day overall foreign exchange risk exposure is maintained within the objectives set out in its risk management policies and managed prudently and responsibly:
Provided that at no time shall the total of the foreign exchange risk exposure exceed 40 per centum of the bank’s or financial institution’s regulatory capital.
(1) The bank of Zambia may, where it considers that the financial situation of a bank or financial institution warrants a lower limit, prescribe such lower limit as it may consider appropriate.
(2) Notwithstanding sub-regulation (1), every bank or financial institution shall—
(a) maintain its foreign exchange risk position as at the close of each business day in any single currency to a maximum of 20 per centum of its regulatory capital; and
(b) ensure that its intra-day foreign exchange risk position in any single currency is maintained within the objectives set out in its risk management policies and managed prudently and responsibly:
Provided that at no time shall the total in any single currency exceed 30 per centum of the bank’s or financial institution’s regulatory capital;
(3) In this regulation—
"overall foreign exchange risk exposure" means the sum of the domestic currency equivalent amount, currency by currency, of all foreign currency denominated assets and liabilities, including the net forward or off-balance sheet currency, of all net short and net long positions in currencies in which the bank or financial institution has positions, at the currently prevailing spot foreign exchange rates in connection with which the bank or financial institution shall be subject to gain or loss if there is a variation in the exchange rate of these currencies.
"foreign exchange risk" in any given single currency is the domestic currency equivalent amount, including the net forward position in that currency, at the currently prevailing spot foreign exchange rate of the foreign currency amount in connection with which the bank or financial institution will be subject to gain or loss if there is a variation in the exchange rate of that currency.
Every bank and financial institution which engages in foreign exchange operations shall submit to the bank of Zambia, within 10 working days following the reference month, a report of its foreign exchange positions and exposures, in the forms set out in the First, Second and Third Schedules.
[Regulations 7 and 8]
|
1. Total regulatory capital |
|
|
(as calculated by using the Second Schedule of the Banking and Financial Services (capital adequacy) Regulations). Attach calculation |
K .................................... |
|
2. Overall foreign currency exposure item 3 of the Second Schedule |
K .................................... |
|
As a percentage of regulatory capital (item 1 above) |
% .................................... |
|
3. Foreign currency exposure on per currency basis |
|
Currency |
Long (short) |
As a percentage of |
|
DEM |
> |
>FFR
>
>ZAR
>
>GBP
>
>USD
>
>OTHERS (specify)
>
[Regulations 7 and 8]
|
Positions in domestic currency equivalent of the spot and forward positions of foreign currencies (1) (using prevailing rates quoted in the Third schedule) |
||||||
|
Currency |
Balance sheet |
Forward |
Overall |
|||
|
Long |
Short |
Long |
Short |
Long |
Short |
|
|
DEM |
||||||
|
FFR |
||||||
|
ZAR |
||||||
|
GBP |
||||||
|
USD |
||||||
|
OTHERS (SPECIFY) |
||||||
|
NET POSITION |
||||||
|
OVERALL EXPOSURE |
(1) Report all unhedged positions, including interest rate hedges, forward contracts, derivatives, etc.
(2) The net position is the difference between the "total long" and "total short" positions.
(3) The overall foreign currency exposure is the sum total of all long and short positions.
[Regulations 7 and 8]
|
Positions in foreign currencies and net domestic currency equivalent positions |
|||||
|
Currency |
Net balance |
Off-balance sheet *Report all unhedged positions, including options, interest rate hedges forward contracts, derivatives, etc.*(forward) |
Total |
Prevailing spot forex rate (at date of this return) |
Net domestic currency equivalent position |
|
DEM |
|||||
|
FFR |
|||||
|
ZAR |
|||||
|
GBP |
|||||
|
USD |
|||||
|
OTHERS (SPECIFY) |
BANKING AND FINANCIAL SERVICES (LARGE LOAN EXPOSURES) REGULATIONS
[Sections 73 and 124]
Arrangement of Regulations
Regulation
1. Title
2. Interpretation
3. Application
4. Limit on single exposures
5. Limit on exposures to a common enterprise
6. Limit on the aggregate of large loans exposures
7. Exceptions, exemptions and other limits
8. Loan syndications
9. Interest or discount on loans
10. Combining of loans to separate borrowers
11. Credit approval
12. Submission of reports
13. Compliance with limits of these Regulations
14. Penalty for non-compliance
[Regulations by the Minister]
SI 96 of 1996.
These Regulations may be cited as the Banking and Financial Services (Large Loan Exposures) Regulations.
In these Regulations, unless the context otherwise requires—
"common enterprise" means—
(a) two or more persons constituting a single risk arising from the direct or indirect control of one of those persons over the others; or
(b) two or more persons having no relationship of control over one another, but who constitute a single risk as a result of being interconnected to the extent that if one of them experienced financial problems, the other or all of them would, in the opinion of the bank of Zambia encounter repayment difficulties;
"control" in relation to a common enterprise, means a situation where—
(a) one or more persons acting in concert, directly or indirectly, own, control or have the power to vote 25 per centum or more of any class of voting shares of another person;
(b) one or more persons, acting in concert, control in any manner, the election of a majority of the directors, trustees, or other persons exercising similar functions, of another person; or
(c) any circumstances exist which indicate that one or more persons acting in concert, directly or indirectly, exercise a controlling influence over the management, policies or affairs of another person;
"corporate group" means—
(a) a corporation and all its subsidiaries; or
(b) a subsidiary of any person which directly or indirectly owns or controls more than 50 per centum of the voting shares of a corporation;
"large loan" means an exposure of a bank or financial institution to any person or common enterprise which equals or exceeds 10 per centum of the bank’s or financial institution’s regulatory capital;
"loans and extension of credit" means—
(a) any direct or indirect advance of funds to a person or common enterprise—
(i) made on the basis of an obligation of that person or common enterprise to repay the funds; or
(ii) repayable from specific property pledged by, or on behalf of, a person or common enterprise;
(b) all credit risk arising from actual claims, potential claims of all kinds and credit substitutes; or
(c) commitments to extend credit and any commitment to acquire a debt security or other right to payment of a sum of money;
"regulatory capital" means those instruments which comprise the capital resources of a bank or financial institution, and the total of which is used by the bank of Zambia for compliance by a bank or financial institution with the minimum capital standard and for assessing capital adequacy, and is calculated in accordance with the Second Schedule to the Banking and Financial Services (Capital Adequacy) Regulations.
These Regulations shall apply to all banks and financial institutions licensed under the Act, and which accept deposits, money market instruments or the equivalent of deposits or money market instruments.
A bank or financial institution shall not incur an exposure to any single person in an amount which, in the aggregate, exceeds 25 per centum of the bank’s or financial institution’s regulatory capital.
5. Limit on exposures to a common enterprise
Where a loan or an extension of credit has been made to a common enterprise, the total exposure of the bank or financial institution to that group shall be aggregated and considered as a single exposure and shall not exceed, in the aggregate, 25 per centum of the bank’s or financial institution’s regulatory capital.
6. Limit on the aggregate of large loans exposures
Notwithstanding the limits prescribed in regulations 4 and 5, a bank’s or financial institution’s large loans exposures to persons and common enterprises shall not exceed, in the aggregate, 600 per centum of the bank’s or financial institution’s regulatory capital.
7. Exceptions, exemptions and other limits
(1) There shall be no limits on loans and extensions of credit to the Government.
(2) There shall be a limit of 50 per centum of the bank’s or financial institution’s regulatory capital on loans and extensions of credit to the following organisations—
(a) a foreign government, its agencies and instrumentalities; and
(b) the International Monetary Fund and the World Bank.
(3) The limit referred to in sub-regulation (2) shall apply to the aggregate of the loans and extensions of credit to each of the organisations referred to in that sub-regulation.
(4) In the case of loans, advances and extensions of credit in the inter-bank market—
(a) there shall be no limit where the inter-bank exposure is fully secured by the Government, including treasury bills and Government bonds with a residual maturity of less than one year.
(b) a bank or financial institution may grant another bank or financial institution a loan and an extension of credit on the security of a Government bond with a residual maturity of one year, but not more than 5 years, for any amount not exceeding 75 per centum of the face value of the pledged securities; and
(c) there shall be an exposure limit of 50 per centum of a bank’s or financial institution’s regulatory capital in respect of unsecured exposures.
(5) The loans, advances or extensions of credit referred to in sub-regulation (4) shall comprise repayment terms which shall not exceed five working days.
(6) Any treasury bills and Government bonds pledged as security against loans, advances or extensions of credit shall be deducted from the bank’s or financial institution’s holdings reported to the bank of Zambia and shall not be counted towards the calculation of the minimum liquidity requirements of the bank.
Where a bank or financial institution agrees with one or more other banks or financial institutions to collectively make a loan or extend credit to a person, only that portion of the loan or credit which is actually advanced by the bank or financial institution and representing its pro rata share of the syndicated loan shall be subject to the loan limits prescribed by regulations 4, 5, 6 and 7.
9. Interest or discount on loans
The lending limits prescribed by regulations 4, 5, 6 and 7 shall not apply to any portion of a loan, advance or extension of credit that represents accrued or discounted interest, unless such interest has been capitalised or is, in any other manner, converted to principal.
10. Combining of loans to separate borrowers
The bank of Zambia shall have the authority—
(a) to determine whether or not, and if so determined, when a loan, advance or extension of credit made to one person shall be attributed to, or combined with, those of another person;
(b) to combine the loans, advances or extensions of credit of one or more persons with those of another person when—
(i) the proceeds of the loans or extensions of credit are used for the direct benefit of the other person;
(ii) a common enterprise is deemed to exist between the persons.
All large loans, advances and extensions of credit together with any other loans, advances or extensions of credit which, added to an already existing facility equals or exceeds 10 per centum of a bank’s or financial institution’s regulatory capital shall be approved in advance, and in writing, by a majority of the members of the board of directors of the bank or financial institution or a special committee consisting of a majority of the members of that board specially constituted for that purpose.
Every bank or financial institution shall—
(a) within 10 days following its month-end and in the Form prescribed in the Schedule, submit to the bank of Zambia a monthly report of its large loans; and
(b) if requested by the bank of Zambia, submit further detailed information on all or any other credits.
13. Compliance with limits of these Regulations
(1) Every loan, advance or extension of credit which is outstanding on the coming into force of these Regulations and which would violate these Regulations if the loan, advance or extension of credit was made after that date shall be reported to the bank of Zambia not later than 21 days following the coming into force of these Regulations.
(2) Subject to sub-regulation (3), the report referred to in sub-regulation (1) shall set out the details of the loan, advance or extension of credit and a period, not exceeding one year or such other period as may be provided for in the original loan agreement, within which to progressively bring the loan, advance or extension of credit within the limits of these Regulations.
(3) Notwithstanding sub-regulation (2), any renewal of a loan, advance or extension of credit done on or after the effective date of these Regulations shall be made only on such terms as shall bring the renewal of a loan, advance or extension of credit into compliance with the limits of these Regulations.
14. Penalty for non-compliance
(1) A bank or financial institution which contravenes these Regulations shall be guilty of an offence and liable, for every day during the contravention continues, to a fine assessed by the bank of Zambia not exceeding six-hundred penalty units or, on conviction, to a fine not exceeding the fine prescribed in the Act, and every director, and any person concerned in the management of the bank or financial institution shall be personally liable to the same fine, or upon conviction, to imprisonment for a term not exceeding two years, or both.
(2) Any director or any person referred to in sub-regulation (1) shall, in addition to the penalties prescribed in that sub-regulation, be liable for removal from office and barred from holding office in the banking and financial sector.
[Regulation 12]
BANK OF ZAMBIA LARGE LOAN EXPOSURES REGULATIONS
Reporting bank:
Month ending:
Regulatory capital (item IV of regulatory capital calculation): K
|
Name of borrower |
Relationship to institution |
Loans, advances and extensions of credit authorised K’ millions |
As a % of regulatory capital |
Amount outstanding K’ millions |
As a % of regulatory capital |
Rate of interest % |
Interest capitalised included in amounts outstanding K’ millions |
Expiry Date of facility |
Security |
Status current\non-current |
|
Total |
BANKING AND FINANCIAL SERVICES (INSIDER LENDING) REGULATIONS
[Sections 73 and 124]
Arrangement of Regulations
Regulation
1. Title
2. Interpretation
3. Application
4. Credit worthiness
5. Lending limits
6. Prior approval
7. Partnership interests
8. Reports by directors
9. Credit approval
10. Submission of reports
11. Renewal of loan, advance or extension of credit
12. Penalty for non-compliance
[Regulations by the Minister]
SI 97 of 1996.
These Regulations may be cited as the Banking and Financial Services (Insider Lending) Regulations.
In these Regulations, unless the context otherwise requires—
"control" in relation to a company, bank or financial institution means a situation where one or more persons, acting in concert, directly or indirectly—
(a) own, control, or have the power to vote 25 per centum or more of any class of voting shares of another person;
(b) control in any manner the election of a majority of the directors of a company, bank or financial institution; or
(c) have the power to exercise controlling influence over the management policies of a company, bank or financial institution;
but does not include a person who has control or ability to exercise a controlling influence over the management policies of a company, bank or financial institution solely by virtue of his position as an officer or director of the company, bank or financial institution;
"director" means—
(a) any person who occupies the position of a director in accordance with the Companies Act;
(b) any director of a bank or financial institution, whether or not receiving compensation;
(c) any director of a holding company of which the bank or financial institution is a subsidiary;
(d) any director of any other subsidiary of a holding company of a bank or financial institution; or
(e) any person who participates, or who has the authority to participate, other than in that person’s capacity as a director, in major policy-making functions of a company, bank, or financial institution, whether or not—
(i) that person is an employee of the company, bank or financial institution; or
(ii) that person is serving without a salary or compensation;
"holding company" in relation to a bank or financial institution means any company which has control over a bank or financial institution;
"immediate family" means the spouse and children of a person;
"insider" means—
(a) any officer, director or principal shareholder of a company, bank or financial institution;
(b) any person who participates or has the authority to participate in major policy-making functions of a company, bank or financial institution whether employed or not by that institution;
(c) a company where an insider of a bank or financial institution owns, directly or indirectly, alone or together with one or more other insiders, more than 20 per centum of the shares of the company or exercises control over the management of the company; or
(d) a company where the bank or financial institution owns more than 10 per centum of the outstanding shares of the company or, in the opinion of the bank of Zambia, is likely to exercise influence over the management of the company;
"large loan" means an exposure of a bank or financial institution to any person in an amount equal to, or exceeding, 10 per centum of the bank’s or financial institution’s regulatory capital;
"loans and extensions of credit" means—
(a) any direct or indirect advance of funds to an insider—
(i) made on the basis of any obligation of that insider to repay the funds; or
(ii) repayable from specific property pledged by that insider or by any other person on behalf of that insider;
(b) all credit risk arising from actual claims, potential claims of all kinds and credit substitutes; or
(c) commitments to extend credit and any commitment to acquire a debt security or other right to payment of a sum of money;
"principal shareholder" means a person that directly or indirectly, or acting through or in concert with one or more persons, owns, controls or has the power to vote more than 10 per centum of any class of voting shares of a company, bank or financial institution;
"regulatory capital" means those instruments which comprise the capital resources of a bank or financial institution, and the total of which is used by the bank of Zambia for compliance by a bank or financial institution with the minimum capital standard and for assessing capital adequacy, and is calculated in accordance with the Second Schedule to the Banking and Financial Services (Capital Adequacy) Regulations;
"related interest" means a company that is controlled by a person, the funds or services of which will benefit that person;
"subsidiary" means any company which is controlled by another company, bank or financial institution.
These Regulations shall apply to—
(a) all banks and financial institutions licenced under the Act, and all directors and principal shareholders of these banks and financial institutions;
(b) the holding company of which a bank or financial institution is a subsidiary, and to any other subsidiary of that holding company;
(c) any company included within the meaning of an insider as defined in these Regulations; and
(d) a political or campaign committee that benefits or is controlled by an insider.
A bank or financial institution shall not make a loan or extend credit to any of its directors, principal shareholders or any related interest of that person or to any persons included within the meaning of an insider as defined in these Regulations, unless the loan, advance or extension of credit—
(a) is made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions by the bank or financial institution with other persons that are not covered by these Regulations and who are not employed by the bank or financial institution; and
(b) does not involve more than the normal risk of repayment.
A bank or financial institution shall not extend credit to any insider or the insider’s related interest, when—
(a) the aggregate of any new and outstanding loans, advances or extensions of credit to that person and his related interests exceeds 10 per centum of the bank’s or financial institution’s regulatory capital; or
(b) the aggregate of all loans, advances or extensions of credit, including any proposed new extension of credit, to all insiders and their related interests, exceeds 100 per centum of the bank’s or financial institution’s regulatory capital.
(1) A bank or financial institution shall not make any loans, advances or extensions of credit to any of its directors, or principal shareholders or to any related interest of that person if the aggregate of any new extension of credit and all outstanding loans and extensions of credit to that person and his related interests exceeds five per centum of that bank’s or financial institution’s regulatory capital unless—
(a) all outstanding amounts of loans or extensions of credit have first been acknowledged, in writing, by the board of directors of the bank or financial institution;
(b) the new loans or extensions of credit have been approved in advance by a majority of the members of the board of directors of the bank or financial institution; and
(c) the interested party has abstained from participating directly or indirectly in the voting.
(2) Any participation in the discussion, or any attempt to influence the voting by the board of directors of a bank or financial institution regarding a loan, advance or extension of credit to any director, principal shareholder, or to any related interest of that person shall constitute indirect participation in the voting by the board of directors and shall nullify the authorisation by the board of directors of the loan, advance or extension of credit.
The total amount of credit extended by a bank or financial institution to a partnership shall be deemed to be extended to any member of the partnership.
Any director of a bank or financial institution who becomes indebted to any bank or financial institution other that the bank or financial institution of which he is a director, in an aggregate amount greater than five per centum of the regulatory capital of the bank or financial institution of which he is a director shall, within 10 days from the date the indebtedness reached that level, make a written report to the board of directors of the bank or financial institution of which he is a director, which report shall state—
(a) the lender’s name;
(b) the date of the loan;
(c) the amount of the loan, advance or extension of credit;
(d) the intended use of the proceeds;
(e) the source of repayment; and
(f) security pledged as collateral.
Any loan, advance or extension of credit by a bank or financial institution to an insider shall be approved in advance, and in writing, by a majority of the members of the board of directors of the bank or financial institution or by a special committee consisting of a majority of the members of the board of directors specially constituted for that purpose.
(1) Every bank or financial institution shall—
(a) submit to the bank of Zambia within 10 working days following its month-end, in the Form prescribed in the Schedule, a monthly report of its insider loans;
(b) if requested by the bank of Zambia submit further detailed information on all or any outstanding exposure to an insider; and
(c) report to the bank of Zambia any loan, advance or extension of credit which is outstanding to an insider—
(i) where that loan, advance or extension of credit is outstanding on the date of coming into force of the regulations and that loan, advance or extension of credit has a balance owing that would have contravened these Regulations if the loan had been made on or after the date of the coming into force of these Regulations;
(ii) if the aggregate of the loans or extensions of credit to insiders exceeds the maximum amount authorised under regulation 5.
(2) The report referred to in sub-regulation (1) shall be made not later than 21 days from the date these Regulations come into force and shall set out details of the exposure and a period, not exceeding one year, within which the exposures shall be brought within the limits set by regulation 5.
11. Renewal of loan, advance or extension of credit
Any renewal of a loan, advance or extension of credit on or after the date of coming into force of these Regulations shall be made only on such terms as shall bring the facility into compliance with the limits prescribed by regulation 5.
12. Penalty for non-compliance
(1) A bank or financial institution which contravenes these Regulations shall be guilty of an offence and liable, for every day that the contravention continues, to a fine assessed by the bank of Zambia not exceeding six-hundred penalty units or, on conviction, to a fine not exceeding the fine prescribed in the Act, and all its insiders, including directors and shareholders, and any person concerned in the management of the bank or financial institution shall be personally liable to the same fine and, upon conviction, to imprisonment for a term not exceeding two years, or both.
(2) Any director or any person referred to in sub-regulation (1) shall, in addition to the penalties prescribed in that sub-regulation, be liable for removal from office and barred from holding office in the banking and financial sector.
[Regulation 10]
BANK OF ZAMBIA INSIDER LENDING EXPOSURE REGULATIONS
|
Name of Borrower |
Relationship to Institution |
Loans, Advances and Extensions of Credit Authorised K’Millions |
As a % of Regulatory Capital |
Amount Outstanding K’Millions |
As a %of Regulatory Capital |
Rate of Interest % |
Interest Capitalised Included in Amounts Outstanding K’Millions |
Expiry Date of Facility |
Security |
Status Current\Non-Current |
|
Total |
BANKING AND FINANCIAL SERVICES (MONEY CIRCULATION PYRAMID SCHEMES) REGULATIONS
[Section 124]
Arrangement of Regulations
Regulation
1. Title
2. Interpretation
SI 44 of 1998.
These Regulation may be cited as the Banking and Financial Services (Money Circulation Pyramid Schemes) Regulations.
In these Regulations, unless the context otherwise requires—
"money circulation pyramid scheme" includes:
(a) any scheme, plan, arrangement, agreement or understanding whether legally enforcement or not, between two or more persons which involve the pooling and distribution of funds by recruitment of subscribers; or
(b) the issue of any notice, circular prospectus, proposal or other document inviting the public for subscription in any scheme referred to in paragraph (a);
"money circulation pyramid schemes activities" includes the acceptance or obtaining of money, directly or indirectly, from member of the public as a regular feature of a business practice, with the prospect of such members (hereinafter referred to as the "participating members") receiving payments or other money, related benefits, directly or indirectly—
(i) on or after the introduction of the public to the business practice (hereinafter referred to as the "new participating members"), from which new participating members, in their turn, money is accepted or obtained, directly or indirectly, as a regular feature of the business practice, whether or not:
(A) the information of the new participating members is limited to their introduction by participating members or extends to the introduction by the new participating members of other persons; or
(B) new participating members are required to acquire movable or immovable property, rights or services;
(ii) on or after the promotion, transfer or change or status of the participating members or new participating members within the business practice;
(iii) from the funds accepted or obtained from participating members or new participating members in terms of the business practice; or
(iv) from the soliciting of, or advertising for, directly or indirectly, money or persons for introduction into or participating in a business practice as described in paragraph (i);
"subscriber" includes a person to whom the money circulation pyramid scheme is offered to and accepted; and
"pyramid sales person" includes a person who has subscribed to such a scheme and who recruits or attempts to recruit others to join or participate in the scheme.
3. No person shall conduct or carry out a money circulation pyramid scheme.
4. Any person acting in contravention of these Regulations shall be guilty of an offence and liable upon conviction to a fine not exceeding 50 thousand penalty units or to a term of imprisonment not exceeding two years or to both.
BANKING AND FINANCIAL SERVICES (BUREAU DE CHANGE) REGULATIONS
[Section 124]
Arrangement of Regulations
Regulation
PART I
PRELIMINARY
1. Title
2. Interpretation
PART II
AUTHORITY OF BANK OF ZAMBIA
3. Authority of Bank of Zambia
4. Delegation of powers by Registrar
5. Power of the Bank of Zambia to call for information
6. Bank of Zambia may prescribe maximum or minimum amounts for transactions
7. Sale of excess foreign exchange
PART III
LICENSING
8. Prohibition of unlicensed foreign exchange business
9. Application for licence
10. Determination of application
11. Scope of and duration of licence
12. Display of licence
13. Restriction on transfer
14. Revocation of licence and right of appeal
15. Honouring of obligations on revocation of licence
16. Surrender of a licence by a bureau
17. Registrar may make enquiry
PART IV
MODE OF OPERATION
18. Capital requirement
19. Nature of Bureaux de Change business
20. Prohibition of forward purchase and sales
21. Receipting of purchases and sales
22. Bureau to display rates and commissions
23. Conduct of bureau business
24. Duty to sell foreign exchange
25. Change of location
26. Notice of changes in management
27. Ownership
PART V
MISCELLANEOUS
28. Power of inspection
29. Submission of audited accounts
30. Submission of returns by bureau
31. Duty to maintain adequate accounting control systems and records
32. False documents
33. Seizure of counterfeit foreign exchange
34. Disqualification of certain persons from management of Bureau
35. Suspension and removal of managers
36. Immunity of Bank of Zambia officials, etc.
37. Customer complaints
38. Transactions to be in confidence
39. Offences
40. Offence by bodies corporate
41. Power of Bank of Zambia to amend fees
42. Savings and transitional provisions
SI 38 of 2003.
PART I
PRELIMINARY
These Regulations may be cited as the Banking and Financial Services (Bureau de Change) Regulations.
In these Regulations, unless the context otherwise require—
"bureau" means a bureau de change licensed under these Regulations to conduct the business of buying and selling foreign exchange;
"company" means a company registered under the Companies Act;
"Foreign Exchange" includes—
(a) bank notes and coins other than the currency of Zambia which are legal tender outside Zambia;
(b) a unit of account of an international body to which Zambia is a member;
(c) any financial instrument denominated in a currency other than that of Zambia;
(d) any right to receive foreign bank notes or coins in respect of any balance at a financial institution located within or outside Zambia;
(e) travellers cheques, credit card and other modes of payment; and
(f) any other instrument or modes of payment that the Bank of Zambia may prescribe;
"licence" means a licence issued under Part III of these Regulations;
"person" includes an individual, a company, a partnership, an association and any group of persons acting in concert, whether or not incorporated; and
"Registrar" means the person appointed as Registrar of banks and financial institutions under the Act.
PART II
AUTHORITY OF BANK OF ZAMBIA
3. Authority of Bank of Zambia
The Bank of Zambia shall be the regulatory authority for the purposes of giving effects to these Regulations.
4. Delegation of powers by Registrar
The Registrar may, to such extent and subject to such conditions as the Registrar may consider proper, delegate to any person or class of persons the performance of any of the powers conferred upon the Registrar in these Regulations.
5. Power of Bank of Zambia to call for information
The Bank of Zambia may require a bureau to furnish details of any of its foreign exchange transactions or provide returns in a format prescribed by the Bank of Zambia giving details of its foreign of its foreign exchange transactions.
6. Bank of Zambia may prescribe maximum or minimum amount for transactions
The Bank of Zambia may prescribe the maximum or minimum amount of any over the counter cash transactions a bureau may engage in.
7. Sale of excess foreign exchange
(1) The maximum open foreign exchange position, consisting of foreign exchange available at a bureau and the balances in its foreign exchange accounts with any bank or banks, that a bureau may maintain at the close of business on any day shall be no more than a per centum of regulatory capital prescribed by the Bank of Zambia.
(2) A bureau shall sell any foreign exchange above the open foreign position prescribed by these Regulations.
PART III
LICENSING
8. Prohibition of unlicensed foreign exchange business
(1) Any person other than a bank or a company licensed under these Regulations shall not deal in or conduct any business of buying or selling any foreign exchange
(2) Any person who contravenes sub-regulation (1) commits an offence and is liable on conviction to a fine not exceeding 50,000 penalty units or to imprisonment for a term not exceeding two years, or to both.
(1) A company shall apply to the Registrar for a licence in form I set out in the Schedule to these Regulations.
(2) A company applying for a licence shall have in its name the words "Bureau de Change".
(3) An application for a licence shall be accompanied by a non-refundable application fee of 30 thousand fee units and the following documents—
(a) memorandum and articles of association of the application company
(b) certified copies of directors’ passports;
(c) lease agreement, where the premises to be used are rented;
(d) a copy of the business plan;
(e) a copy of the audited accounts;
(f) a copy of the certificate of incorporation;
(g) a director’s questionnaire in Form III set out in the Schedule to these Regulations; and
(h) vital statistics form in For II set out in the Schedule to these Regulations.
10. Determination of application
(1) The Registrar shall, within 120 days from the date of receipt of a complete application for a licence, consider the application.
(2) Where the Registrar is satisfied that the applicant is a fit and proper person to be licensed as a bureau and has complied with the requirements of these Regulations, the Registrar shall approve the application and may refuse to grant a licence where the Registrar is not so satisfied.
(3) For the purpose of this regulation, a complete application is one that is verified by the Bank of Zambia as fully meeting all the requirements of these Regulations.
(4) The Registrar shall, before granting a licence under this Part, cause an inspection to be conducted of the proposed place of business.
(5) The Registrar shall, within seven days after the expiration of the expiration of the period prescribed under sub-regulation (1) inform the applicant of the decision.
(6) Where the Registrar refuses to grant a licence, the Registrar shall inform the applicant accordingly giving reasons for the refusal.
(7) The Registrar shall, where an application is approved by the Registrar, and upon the payment of a fee of 60 thousand fee units by the applicant, issue the applicant with a licence in Form IV set out in the Schedule to these Regulations.
(8) A fee of 30 thousand fee units shall be payable for every additional branch of a bureau.
11. Scope of and duration of licence
(1) A licence authorises its holder to conduct the business of a bureau de change at the place or places of business specified in the licence.
(2) A licence shall remain valid unless it is revoked or surrendered to the Registrar.
(3) A fee of 60 thousand fee units shall be payable on the renewal of a licence.
(4) A licence shall lapse if not renewed in accordance with the provisions of these Regulations.
(5) A licence may be issued subject to such terms and conditions as the Bank of Zambia may determine.
(1) A bureau shall display or exhibit its licence or a certified true copy thereof in a conspicuous place on the premises where it conducts its business.
(2) The Bank of Zambia shall fine any bureau which contravenes this Regulation an amount of 1,000 penalty units and, in the case of a continuing breach, a further fine of five hundred penalty units for every day during which the contravention continues:
Provided that the further fine referred to in this sub-regulation shall not exceed 50,000 penalty units.
(1) A licence shall not be transferred, assigned or encumbered in any bureau.
(2) A person shall not operate or manage a bureau on behalf of another bureau.
(3) Any person who contravenes this regulation commits an offence and is liable upon conviction to a fine not exceeding 1,000 penalty units or to imprisonment for a term not exceeding two years, or to both.
14. Revocation of licence and right of appeal
(1) The Registrar shall revoke a licence where—
(a) after the issuance of the licence, the Registrar finds that the information in the application for the licence was false or misleading in a material particular;
(b) the licensee has not commenced the operations permitted under the licence three months after the date of issuance of the licence;
(c) the licensee has contravened any provision of these Regulations or any other law applying to the licence;
(d) the licensee has persistently failed to comply with any condition of the licence or instructions issued by the Bank of Zambia;
(e) the licensee is placed under receivership or liquidation or is adjudged bankrupt;
(f) the licence has since the issuance of its licence ceased to qualify for the licence;
(g) the licence has engaged in unsafe or unsound practices or in malpractice or irregularities in the management of its affairs;
(h) the licence’s primary and regulatory capital falls below the minimum required by the Bank of Zambia;
(i) the licensee has in the course of the renewal of the licence failed to disclose to the Registrar material information of which the licensee was aware, or should, with the exercise of such diligence as could have reasonably been expected in the circumstances, have been aware; or
(j) the Registrar considers it appropriate.
(2) The Registrar may, by notice in writing, require a bureau to show cause, which seven working days, why the bureau's should not be revoked.
(3) Where a bureau fails to respond to the notice issued under sub-regulation (2), or if the Registrar is not satisfied with the cause shown, the Registrar may revoke the licence, and shall so inform the bureau in writing.
15. Honouring of obligations on revocation of licence
The suspension, revocation or expiry of a licence shall not relieve the licensee of any obligation incurred or assumed during the period of validity of the licence.
16. Surrender of licence by bureau
(1) A bureau may, with the prior written approval of the Registrar surrender its licence by delivery it by hand to the Registrar.
(2) A bureau may, before surrendering its licence, give the Registrar three months notice of its intention to surrender the licence.
17. Registrar may make inquiry
The Registrar may, before exercising any power under this Part, make such inquiry or, give such directions as the Registrar considers fit, for the purpose of ensuring that the interests of the public are safeguarded.
PART IV
MODE OF OPERATION
(1) The Bank of Zambia shall prescribe the minimum primary and regulatory capital of a bureau by Gazette notice.
(2) A bureau that is operating at the date of the coming into force of these Regulations and that does not meet the minimum capital requirement shall build up its capital to the prescribed level by no later than 90 days from the coming into force of these Regulations.
(3) Any bureau which, or person who, contravenes sub-regulation (2) commits an offence and is liable upon conviction to a fine not exceeding ten thousand penalty units and in the case of a continued contravention, a further fine not exceeding five thousand penalty units for every day that the contravention continues:
Provided that the further fine referred to in this sub-regulation shall not exceed 50 thousand penalty units.
19. Nature of Bureaux de Change business
(1) A bureau shall only engage in—
(a) over the counter buying and selling of foreign exchange cash.
(b) buying and selling travellers cheques; and
(c) buying and selling such other instrument as may be prescribed by the Bank of Zambia.
(2) A bureau shall open and maintain a foreign exchange account with a bank shall ensure that the account is solely used for the day to day operations of bureau.
(3) A bureau shall not in the operation of its accounts remit, receive or make any transfer on behalf of its customer.
20. Prohibition of forward purchases by bureau
A bureau shall not, nor shall any of its officers or members of staff—
(a) deposit or accept kwacha from a customer with intent to obtain or supply the foreign exchange equivalent either wholly or in part at a future date; or
(b) deposit or accept foreign exchange from a customer with the intent of obtaining or supplying the kwacha equivalent either wholly or in part at a future date.
21. Receipting of purchase and sales
(1) A bureau shall, for every sale and purchase of foreign exchange, issue an accurate official receipt in form V set out in the Schedule to these Regulations.
(2) A bureau shall not issue the receipt referred to under sub-regulation (1) for a purpose other than to cover an actual purchase or sale of foreign exchange.
22. Bureau to display rates, commissions, etc
(1) A bureau shall display exchange rates in a conspicuous place at any premises at which it conducts its business in accordance with guidelines issued by the Bank of Zambia.
(2) A bureau shall buy and sell foreign currencies at or within the rates displayed.
(3) A bureau shall display the commission to be charged on any transaction or other charges applicable in a clear and prominent manner at all places where it conducts its business.
(4) Any bureau which, or person who, contravenes the provisions of this Regulation commits an offence and is liable, on conviction, to a fine not exceeding 50 thousand penalty units or to imprisonment for a term not exceeding two years, or to both.
23. Conduct of bureau business
A bureau shall—
(a) conduct its business with integrity, produce and professional skill;
(b) engage only in bona fide transactions;
(c) exercise care and caution and avoid entering into transactions, that may involve or facilitate money laundering.
24. Duty to buy or sell foreign exchange
Subject to regulation 23, a bureau shall not refuse to buy or sell any foreign exchange to any customer at or within the indicated rated where the foreign exchange required by the customer is available at the bureau.
(1) A bureau shall not without the prior written approval of the Bank of Zambia—
(a) open a new place of business; or
(b) change its business location.
(2) The Bank of Zambia may, in granting its approval under sub-regulation (1) impose such conditions as it considers fit.
26. Notice of changes in shareholding, directors and senior management
A bureau shall not, without the Bank of Zambia’s prior approval make any changes in its shareholding, directors senior management or the name of the bureau.
A person who has de jure control or de facto control of a bureau shall not own any share in the capitals of, or acquire or maintain de jure or de facto of any other bureau.
PART V
MISCELLANEOUS
(1) The Registrar, the Bank of Zambia or any person authorised by the Registrar or the Bank of Zambia, may at any time cause an inspection to be made of any bureau and its books of accounts at any place where the bureau conducts its business.
(2) The bureau shall cause its books and accounts to be produced to an inspector appointed in sub-regulation (1) and shall ensure that its staff furnishes such information as the inspector may reasonably require for the purpose of the inspection.
(3) A person who obstructs, hinders or endeavours to obstruct or hinder any inspection of a bureau or its books and accounts commits an offence.
29. Submission of audited accounts
(1) A bureau shall, not later than three months after the end of its financial year, submit its audited accounts to the Bank of Zambia.
(2) Any bureau that contravenes this Regulation commits an offence and shall be liable upon conviction to a fine not exceeding one thousand penalty units, and a further fine of five hundred penalty units for every day during which the contravention continues:
Provided that the further fine referred to in this sub-regulation shall not exceed fifty thousand penalty units.
30. Submission of return by bureau
(1) A bureau shall submit a monthly return of all purchases and sales of foreign exchange in Form VII set out in the Schedule to these Regulations.
(2) A bureau shall submit to the Bank of Zambia—
(a) a weekly return of the sales and purchases and open foreign exchange position, which shall be submitted not later than the close of business on every first working day of the week after which the return is being made;
(b) its quarterly balance sheet, profit and loss account and a cash flow statement within 10 working days after the end of every quarter in a form prescribed by the Bank of Zambia; and
(c) any other returns as may be required by the Bank of Zambia.
(3) Any bureau that contravenes this Regulation commits an offence and shall be liable upon conviction to a fine not exceeding one thousand penalty units, and a further fine of five hundred penalty units for every day during which the breach continues:
Provided that the further fine referred to in this sub-regulation shall not exceed fifty thousand penalty units.
31. Duty to maintain adequate accounting control systems and records
(1) A bureau shall maintain adequate accounting and control systems and keep complete records and registers relating to its foreign exchange business.
(2) A bureau shall keep its books, accounts, record and registers for a period of at least six years from the date on which a transaction to which they relate takes place.
Any person who issues or takes part in the issuance of a document referred to or required to be furnished under the provisions of these Regulations, which is false in any material particular, or any other person who signed it commits an offence and is liable on conviction to a fine not exceeding fifty thousand penalty units or to imprisonment for a term not exceeding two years or both.
33. Seizure of counterfeit foreign exchange
(1) A bureau shall record any case involving counterfeit foreign exchange and shall immediately the case occurs report the matter to the Bank of Zambia and to the police.
(2) A bureau shall confiscate any counterfeit foreign exchange coming into the possession of the bureau and shall immediately hand it over to the police.
34. Disqualification of certain persons from management of bureau
A person shall not be appointed as a Director, officer or manager of a bureau if that person—
(a) is not a fit and proper person to hold the relevant office in relation to integrity or professional expertise;
(b) is not a natural person or above the age of 21 years;
(c) is an undischarged bankrupt;
(d) has been convicted of a felony or any offence involving dishonesty;
(e) has been declared or otherwise adjudged in any official proceedings to be mentally incompetent to manage that person’s affairs;
(f) is under suspect or has been removed by order of the bank of Zambia under these Regulations; or
(g) has been a Director, chief executive officer, chief financial officer or manager of a bureau whose licence has been revoked or a company which has been adjudged insolvent, entered into composition, with creditors, gone into liquidation, declared bankrupt or has entered into any other arrangement with creditors or taken any other action with similar effect in Zambia or elsewhere and unless that person shows that the person was not responsible for the insolvency, liquidation, composition with creditors or other action with similar effect in Zambia or elsewhere and unless approval of the Bank of Zambia has been given for that person to act or continue to act as a Director or be directly concerned in the management of the bureau.
35. Suspension and removal of managers
(1) The Bank of Zambia may suspend a Director or other officer of a bureau from office for any period for non-compliance with these Regulations by notice in writing addressed to the concerned person.
(2) The Bank of Zambia may by notice request a Director or officer concerned in the management of a bureau show cause why the Director or officer should not be removed from office for breach of these Regulations or any other law affecting the operation of the business or for conducing the business in an unsafe and unsound manner.
(3) Where a Director or officer fails to comply with a notice given under sub-regulation (1), or the Bank of Zambia is not satisfied with the cause shown under sub-regulation (2), the Bank of Zambia may remove the Director or officer from office.
36. Immunity of Bank of Zambia officials, etc.
The bank of Zambia, the Registrar or any person authorised by the Bank or Zambia or the Registrar under these Regulations shall not be subject to any action, claim or demand by a liability to any person in respect of anything done or omitted to be done in pursuance or in the execution or intended execution or in connection with the execution or intended execution of any power or duty conferred upon the Bank of Zambia or the Registrar by these Regulations.
A bureau shall in legible letters written in the English language, display on its premises a notice informing customers that any complaints about any foreign exchange transaction may be lodged with the Bank of Zambia.
38. Transactions to be in confidence
A bureau and its members of staff shall conduct and ensure that all transactions conducted by the bureau or any member of staff are done and maintained in the strictest confidence.
Any person who—
(a) engages in the business of a bureau without a licence issued under these Regulations or buys and sells Foreign exchange contrary to the provisions of these Regulations;
(b) obstructs any person in the exercise of any powers conferred upon that person under these Regulations;
(c) purchases or sells foreign exchange outside the limits set by the Bank of Zambia;
(d) engages in forward purchases or sales of foreign exchange;
(e) fails to provide information required under these Regulations;
(f) with intent to evade any provision of these Regulations, destroys, mutilate, secretes or removes any document; or
(g) contravenes a restriction or duty imposed by these Regulations or fails to comply with any directive issued by the Registrar, authorised person o the Bank of Zambia;
commits an offence and is liable on conviction to a fine not exceeding 50,000 penalty units or imprisonment for a term not exceeding two years, or to both.
40. Offence by bodies corporate
Where a body corporate is convicted of an offence, or is fined under these Regulations, any person who is a Director of, or who is concerned in the management of, that body corporate shall be deemed to have committed the same offence and is liable to be fined as if the person authorised or permitted the act or omission constituting the offence.
41. Power of Bank of Zambia to amend fees
The Bank of Zambia may amend any fees payable under these Regulations.
42. Savings and transitional provisions
(1) Any bureau operating or in existence before the coming into force of these Regulations shall within 30 days of coming into force of these Regulations, take necessary steps required to make it comply with the requirements of these Regulations.
(2) Notwithstanding the repeal of the Bank of Zambia (Foreign Currency) Regulations, 1994—
(a) a bureau to which sub-regulation (1) applies shall be deemed to hold a licence under these Regulations until the date when the licence last issued to it would, under the former Regulations, have expired;
(b) any application pending under the repealed regulations shall be deemed to have been made under the corresponding provisions of these Regulations;
(c) any right or benefit accruing, or liability incurred, under the repealed Regulations shall continue in accordance with and subject to these Regulations;
(d) any regulations, order, notice or direction made or given and in force, immediately before the commencement of these Regulations, continue in force until revoked, as if made or given under these Regulations.
(3) A bureau to which this Regulation applies may surrender its licence by delivering the licence to the Registrar together with a notice in writing stating that it does not intend to continue trading as a bureau before expiry of its licence.
FORM I
[Regulations 9, 10 and 21]
BANK OF ZAMBIA
THE BANKING AND FINANCIAL SERVICES (BUREAU DE CHANGE) REGULATIONS 2003
APPLICATION FOR A BUREAU DE CHANGE LICENCE
1. Full name of applicant (block letters)....................................................
2. Postal address of applicant (block letters).............................................
Registered Address ..........................................................................
3. Telephone number ................................................................................
Cell Phone number .......................... E-mail address ..................................
4. Location of proposed Bureau de change ....................................................
(a) District ................................................................................................
(b) City/Town ............................................................................................
(c) Physical address ..................................................................................
(d) Other information on location (if any) ......................................................
(e) Location of branches ...............................................………………..........
5. (i) Applicant's bankers .............................................................................
(ii) ..........................................................................................................
6. (i) Number of Certificate of incorporation ..................................................
(ii) Date of certificate of incorporation .......................................................
7. Full names and physical addresses of directors and shareholders of the applicant company and their bankers:
|
Name |
Address |
Name of bank |
|
........................................................................................................................ |
........................................................................................................................................................ |
...................................................................................................................................... |
FORM II
BANK OF ZAMBIA
THE BANKING AND FINANCIAL SERVICES (BUREAU DE CHANGE) REGULATIONS, 2003
VITAL STATISTICS FORM FOR SHAREHOLDERS AND DIRECTOR
Part A
(This Part applies to Zambia citizens only)
Name:.............................................................................................................
Date of Birth ............................................ Place of Birth ...................................
Passport No./NRC No. ........................................... Expiry date (if passport No. indicated) .......................................................
Residential Address ....................................... Telephone No. .............................
Business Address ............................................ Telephone No. ............................
Marital Status .......................................... No. of Children .................................
Names of Spouse ................................... Identity card number ...........................
Next of kin ................................ Name of Parents .............................................
PART B
(This part applies to Non-Zambians only)
Name ....................................... Residential Address .........................................
......................................................................................................................
Immigration Permit No ................................. Passport No .................................
Work Permit No. ..................................... Valid from .........................................
Passport Expiry Date ......................... Expiry Date into Zambia ...........................
PART C
(Applies to both Zambian and Non-Zambians)
Educational background .......................................................................……………....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Employment Record
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Last employer where applicable .......................................................................
Employer’s reference
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Signature .........................................................
Date ................................................................
FORM III
BANK OF ZAMBIA
THE BANKING AND FINANCIAL SERVICES (BUREAU DE CHANGE) REGULATIONS 2003
DIRECTORS QUESTIONNAIRE
STATEMENT BY INDIVIDUALS WHO ARE HOLDING, OR PROPOSING TO HOLD THE OFFICE OF A DIRECTOR OR AN EXECUTIVE OFFICER OF A BUREAU DE CHANGE
(If insufficient space provided, please attach a separate sheet)
(Confidential and not available for inspection by the public)
1. Name of institution in connection with which this questionnaire is being completed ("the institution")
.......................................................................................................................................................................................................
2. Your Surname: ........................................................................................................................................................................
3. Your full forenames: ...............................................................................................................................................................
4. Former surname(s) and or forename(s) by which you may have been known:
5. Please state in what capacity you are completing this questionnaire, i.e. as a current or prospective Director, executive officer or combination of these. Please state your full title and describe the particular duties and responsibilities attaching to the position(s) that you hold or will hold. If you are completing this form in the capacity of Director, indicate whether, in your position as Director, you have or will have executive responsibility for the management of the institution’s business. In addition, please provide a copy of your curriculum vitae, unless it has already been provided:
6. Residential address: ..................................................................................................................................................................
7. Any previous residential address(es) during the past 10 years: ................................................................................................
8. Date and place of your birth (including town or city) ..................................................................................................................
9. Your nationality and how it was acquired (birth, naturalisation or marriage): ...........................................................................
10. Name(s) and address(s) of your bankers during the past 10 years: ......................................................................................
11. Your professional qualifications and year in which they were obtained: ..........................................................................................................................................................................................................
12. Your occupational and employment now and during the past 10 years including the name of your employer in each case, the nature of the business, the position held and relevant dates: .........................................................................................................................................................................................................
13. Of what bodies corporate (other than the institution) are you a Director or an executive officer and since when?
14. Do you have any direct or indirect interest representing 15 per cent or more of the issued capital of any body corporate (other than the institution) that is now registered, or has applied for authorisation, under the Act? If so give particulars:
.......................................................................................................................................................................................................
15. Of what bodies corporate other than the institution and those listed in reply to question 13 have you been a Director or an executive officer at any time during the past 10 years? Give relevant date:
.......................................................................................................................................................................................................
16. Do any of the bodies corporate listed in reply to question 12, 13, 14 and 15 maintain a business relationship with the institution? If so, give particulars:
.......................................................................................................................................................................................................
17. Do you hold or have you ever held or applied for a licence or equivalent authorisation to carry on any business activity in the Republic of Zambia ("the Republic") or elsewhere? If so, give particulars, if any such application was refused or withdrawn after it was made or any authorisation was revoked, give particulars:
......................................................................................................................................................................................................
18. Does any institution with which you are, or have been associated as Director or executive office hold, or has it ever held or applied for, a licence or equivalent authorisation to carry on any business activity ? If so, give particulars. If any such application was refused, or was withdrawn after it was made or an authorisation revoked, give particulars:
......................................................................................................................................................................................................
19. Have you at any time been convicted of any offence, excluding—
(i) any offence committed when you were under 18 years, unless the same was committed within the last 10 years .........................................................................................................................................................................................................
(ii) any road traffic offence ....................................................................... or
(iii) any political offence:............................................................................
20. Have you, in Zambia or elsewhere, been censured, disciplined, warned against some conduct, or made the subject of a court order at the instigation of a regulatory authority or any professional body to which you belong, have you ever held a practising certificate subject to conditions? If so give particulars: ..........................................................................................................................................................................................................
21. Have you, or has any body corporate, partnership or unincorporated institution which you are, or have been, associated with a Director or executive officer, been the subject of an investigation, in Zambia or elsewhere, by or at the instigation of a government department or agency, professional association or other regulatory body if so give particulars: ..........................................................................................................................................................................................................
22. Have you, in Zambia or elsewhere, been dismissed from any office or employment, or subject to disciplinary proceedings by your employer or barred from entry to any profession or occupation? If so, give particulars: .........................................................................................................................................................................................................
23. Have you ever been declared insolvent (either provisionally or finally) by a court in Zambia or elsewhere, liable for any fraud, misfeasance or other misconduct towards any person ? if so, give particulars: ........................................................................................................................................................................................................
24. Have you, in connection with the formation or management of any body corporate, partnership or unincorporated institution, been adjudged by a court in Zambia or elsewhere, civilly liable for any fraud, misfeasance or other misconduct towards any members thereof? If so give particulars: .......................................................................................................................................................................................................
25. Have you, in connection with the formation or management of any body corporate, partnership or unincorporated institution, been adjudged by a court in Zambia or elsewhere, civilly liable for any fraud, misfeasance or other misconduct towards any members thereof? If so give particulars: .....................................................................................................................................................................................................
26. Has any body corporate, partnership or unincorporated institution with which you were associated as a Director or executive officer, in Zambia or elsewhere, been would up, made subject to an administration order, otherwise made any compromise or arrangement with its creditors or ceased trading, either while you were associated with it or within one year after you ceased to be associated with it, or has anything analogues to any of these events occurred under the laws of any other jurisdiction? If so, give particulars:....................................................................................................................................
27. Have you been concerned with the management or conduct of the affairs of an institution that, by reason of any matter relating to a time when you were so concerned, has been censured, warned as to future conduct, discipline or made the subject of a court order at the instigation of any regulatory authority in Zambia or elsewhere? If so give particulars: .......................................................................................................................................................................................
28. In carrying out your duties, will you be acting on the directors or instructions of any other individual or institution? If so give particulars:................................................................................................................................................................................
29. Do you, or does any related party of whom you are aware, undertake business with this institution? If so give particulars:......................................................................................................................................................................................
30. How many shares in the institution are registered in your name or the name of a related party? If applicable, give name(s) in which registered and class of shares: ........................................................................................................................................................................................
31. How many shares in the institution registered in your name or that of a related party are related parties beneficially interested? ...........................................................................................................................................................................
32. Do you, or does any related party, hold any shares in the institution as trustee or nominee? If so, give particulars: .....................................................................................................................................................................................
33. Are any of the shares in the institution mentioned in reply to questions 30, 31 and 32? ........................................................................................................................................................................................
34. Equitably or legally charged or pledged to any party? If so give particulars: ..........................................................................................................................................................................................
35. What proportion of the voting power at any general meeting of the institution (or of another body corporate of which it is a subsidiary) are you or any related party entitled to exercise or control the exercise of ? ......................................................................................................................................................................................
36. If the exercise of the voting power at any general meeting of the institution, or of another body corporate of which it is a subsidiary, is or may be controlled by one or more of your associates, or any related party, give the proportion of the voting power so controlled in each case and the identity of each associate. ...............................................................................................................................................................................................
37. Are you currently, or do you, other than in a professional capacity, expect to be engaged in any litigation in Zambia or elsewhere in the next 12 month? If so give particulars: .................................................................................................................................................................................................
38. Do you have a basic knowledge and understanding of the risks to which financial institution are exposed? ..................................................................................................................................................................................................
39. Have you acquainted yourself with, and do you understand, the extent of the rights and powers, as well as your responsibilities and duties as a Director of the institution, as contained in the applicable law? (to be completed only by directors or prospective directors). ..................................................................................................................................................................................................
DECLARATION
I ........................................................................................................... hereby declare the following: This statement consists of ...................................... pages, each signed by me. The content of this declaration is true to the best of my knowledge and belief. I am aware that should it be submitted as evidence and I know that something appears therein that I know to be false or believe not to be true, I may be liable to prosecution.
I undertake that for as long as I continue to be a Director or executive officer or the institution, I will notify the Registrar of any material changes to, or affecting the completeness or accuracy of, the information supplied by me in item 1-38 as soon as possible, but in any event not later than 21 days from the day that the changes come to my attention.
I will ensure that at all times while acting in my capacity as a Director or executive officer or the institution, undertake to:
– act in good faith towards the financial institution(s) in the group;
– avoid conflict between other interests and the interest of the financial institution(s) in the group; and
– place the interest of the financial institution(s) in the group above all other interests?
I know and understand the content of this declaration. I have/do not have* objections to taking the prescribed oath.
I consider the prescribed oath to be binding/not binding* on my conscience.
...................................................................
Signature of Deponent
.................................
Date
I certify that the above statement was taken by me and that the deponent has acknowledged that he/she* knows and understands the content of the statement. This statement was sworn to/affirmed* before and the deponent’s signature was place thereon in my presence at ...................................................... on this ................................... day of ................................... 20 ........................................................
Commissioner of Oaths
Full Names ...................................................................................................
Ex officio .....................................................................................................
Area: .............................................................................................................
Address: .........................................................................................................
*Delete whichever is not applicable
FORM IV
Serial Number ..................
Licence No. .....................
BANK OF ZAMBIA
THE BANKING AND FINANCIAL SERVICES (BUREAU DE CHANGE) REGULATIONS 2003
LICENCE FOR OPERATION OF A BUREAU DE CHANGE
This is to certify
That .......................................................................................................................................................................................................... is licensed to carry on the business of buying and selling foreign exchange as a Bureau de change at ........................................................................................................................................................................................................ This licence has been issued under the Banking and Financial Services (Bureau de change Regulations) 2003 and shall be valid from until revoked or surrendered to the Registrar ............................................................................................................................................ to ................................................... subject to the provisions of the said Regulations ................................................................... and to the following terms and conditions ........................................................................................................................................................................................................................................................................................................................................................................
Registrar ...................................
Date .........................................
FORM V
Serial No. ....................
BANK OF ZAMBIA
THE BANKING AND FINANCIAL SERVICES (BUREAU DE CHANGE) REGULATIONS 2003
PURCHASE OF FOREIGN CURRENCY RECEIPT (CASH)
Name and Stamp of Bureau:
Date: .................................
|
Currency |
Amount |
Rate |
Zambian Kwacha Equivalent |
Use of foreign currency (tick as appropriate)
[ ] Tourism [ ] Export proceeds [ ] Education [ ] Bank/Bureau
[ ] other (specify)...........................................................................................
Name of seller .................................................................................................
Nationality ......................................................................................................
ID/Passport No. ...............................................................................................
Permanent Residential Address .........................................................................
....................................................................................................................
Signature .....................................................................................................
Signature of bureau official .............................................................................
FORM VI
BANK OF ZAMBIA
THE BANKING AND FINANCIAL SERVICES (BUREAU DE CHANGE) REGULATIONS 2003
SALE OF FOREIGN CURRENCY (CASH)
Name and Stamp of Bureau:
Date: .......................................
|
Currency |
Amount |
Serial No. |
Rate |
Zambian Kwacha Equivalent |
|
US$/ZAR |
||||
Name of buyer ................................................................................................
Nationality .....................................................................................................
ID/Passport No. ...............................................................................................
Permanent Residential Address ............................…................................................................................................................................................................
...................................................................................................................... Signature ..................................................................
Signature of Bureau official .....................................
FORM VII
BANK OF ZAMBIA
THE BANK AND FINANCIAL SERVICES (BUREAU DE CHANGE) REGULATIONS 2003
SALE OF FOREIGN CURRENCY RECEIPT
Name and Stamp of Bureau:
Date: .................................
|
Currency |
Amount |
TC/draft No. |
Issuer Thomas Cook, Barclays etc |
Rate |
Zambian Kwacha Equivalent |
Name of buyer ................................................................................................
Nationality .....................................................................................................
ID/Passport No. ..............................................................................................
Signature .......................................................................................................
Residential Address ..........................................................................................
Signature of bureau official ...............................……...........................................
FORM VIII
BANK OF ZAMBIA
THE BANKING AND FINANCIAL SERVICES (BUREAU DE CHANGE) REGULATION 2003
PURCHASE OF FOREIGN CURRENCY RECEIPT
(Travellers Cheques and Bank Drafts)
Name and Stamp of Bureau
Date: .............................
|
Currency |
Amount |
TC/draft number |
Issuer Thomas Cook, Barclays etc. |
Rate |
Zambian Kwacha Equivalent |
Source (tick as appropriate) [ ]
[ ] Tourism [ ] Export proceeds [ ] Bank/Bureau
[ ] Other specify
Name of buyer .............................................................................................
Nationality ....................................................................................................
ID/Passport No ...........................................................................................
Signature ......................................................................................................
Residential Address .......................................................................................
DECLARATION BY CHAIRMAN OF A FINANCIAL INSTITUTION OR AUDITOR IN CASE OF A NEW FINANCIAL INSTITUTION
I, the undersigned .......................................................................................... being Chairman of the board of creditor/auditor* of ......................................... confirm that I have carefully studied all information supplied in this statement and, after discussion with the deponent ................................................. and all other members of the board, and after having taken into account any other information at my disposal or that has come to my attention, I am of the opinion that the deponent ............................................................. is fit and proper to take up office in this institution. In the case of appointment of a Director I confirm that the appropriate conditions of the articles of association of the company have been complied with. Similarly, in the case of the appointment of an executive officer, I confirm that company policy has been complied with.
Name ......................................................
Signed ....................................................
Date .......................................................
*Delete whichever is not applicable
FORM IX
BUREAU DE CHANGE CAPITAL COMPUTATION FORM
|
Bureau de Change |
||
|
1. CAPITAL COMPUTATION SCHEDULE |
||
|
K million |
||
|
(a) |
Paid –up-Capital |
0 |
|
(b) |
Share Premium |
0 |
|
(c) |
Retained earnings |
0 |
|
(d) |
Other Reserves |
0 |
|
(e) |
Total Reserve (b + c + d) |
0 |
|
(f) |
Sub-total (a + e) |
0 |
|
(g) |
Deduct: |
0 |
|
(h) |
Adjustments |
0 |
|
(i) |
Sub total (h) |
0 |
|
(j) |
TOTAL PRIMARY CAPITALS (f-i) |
0 |
|
(k) |
MINIMUM REQUIRED |
|
|
(l) |
(Minimum capital requirement) |
0 |
|
(m) |
EXCESS (DEFICIENCY) (J + I) |
0 |
|
II SECONDARY (TIER 2) CAPITAL |
||
|
(a) |
Eligible loan stock/capital |
|
|
(b) |
Other (i.e. computers fax machines, notes detecting and counting machines etc) |
0 |
|
(c) |
TOTAL SECONDARY CAPITALS (II(a) + II(b) |
0 |
|
(d) |
ELIGIBLE SECONDARY CAPITAL (up to 100% of Primary Capital |
0 |
|
(e) |
ELIGIBLE TOTAL CAPITAL (Regulatory Capital (Ij + Iid) |
0 |
|
(f) |
MINIMUM CAPITAL REQUIREMENT |
0 |
|
Source: Bank of Zambia, Non-Bank financial System supervision |
BANKING AND FINANCIAL SERVICES (EXEMPTION) REGULATIONS
[Section 130]
Arrangement of Regulations
Regulation
1. Title
2. Exemption from limitation on voting control
SI 130 of 2003.
These Regulations may be cited as the Banking and Financial Services (Exemption) Regulations.
2. Exemption from limitation on voting control
The Bank set out in the Schedule to these Regulations is exempted from complying with the limitation on voting control as provided by sub-section (2) of section 23.
[Regulation 2]
Indo Zambia Bank Limited
BANKING AND FINANCIAL SERVICES (MICRO-FINANCE) REGULATIONS
[Section 124]
Arrangement of Regulations
Regulation
PART I
PRELIMINARY
1. Title
2. Interpretation
3. Application
PART II
AUTHORITY OF THE BANK OF ZAMBIA
4. Authority of Bank of Zambia
5. Power of Bank of Zambia to call for information
PART III
LICENSING
6. Prohibition of unlicensed micro-finance services
7. Application for licence
8. Determination of application
9. Scope and duration of licence
10. Display of licence
11. Restriction on transfer
12. Revocation of licence
13. Licensee to honour obligations in spite of revocation of licence
PART IV
CATEGORIES OF MICRO-FINANCE INSTITUTIONS
14. Categories of Micro-finance Institutions
15. Services to be provided by deposit taking micro-finance institution
16. Services to be provided by non-deposited micro-finance institution
17. Applicants to designate persons to cover losses etc.
18. Prohibition of change of category without approval of registrar
19. Change of category of licence
PART V
GOVERNANCE OF MICRO-FINANCE INSTITUTIONS
20. Structure of micro-finance institution
21. Management of micro-finance institution
22. Systems of internal control
23. Qualifications of Director or person in management of micro-finance institution
24. Suspension or removal of officer
25. Immunity of Registrar etc.
PART VI
OPERATIONS OF MICRO-FINANCE INSTITUTIONS
26. Minimum primary and regulatory capital
27. Insider lending
28. Prudence in business conduct
29. Extension of credit
30. Disclosure of cost of borrowing
31. Micro-finance institution to display customer rights, responsibilities, etc.
32. Branches of existing of micro-finance institution
33. Closure of micro-finance institution
34. Notice of change in shareholding, directors and senior managers
35. Ownership
36. Control of micro-finance institution
PART VII
SUPERVISION OF MICRO-FINANCE INSTITUTION
37. Inspection of micro-finance institution
38. Submission of returns by micro-finance institution
39. Disclosure of information
40. Display of balance sheet
41. Supervision fee
42. Risk weighed assets
PART VIII
GENERAL PROVISIONS
43. False documents
44. Confidentiality of transactions
45. Vital statistics
46. Fees
47. Offences
48. Offences by body corporate
49. General penalty
50. Compliance by existing micro-finance institutions
SI 3 of 2006.
PART I
PRELIMINARY
These Regulations may be cited as the Banking and Financial Services (Micro-finance) Regulations.
In these Regulations, unless the context otherwise requires—
"borrower" means a person who has concluded a loan agreement with a micro-finance institution;
"common bond institution" means a micro-finance service provider whose members are natural persons drawn exclusively from a pre-existing social, economic or professional organisation or group linked to any other financial institution by common ownership or control by management, de jure or de facto, and where each member has an equal number of voting rights;
"credit facility" means—
(a) the granting by a micro-finance institution of an advance, loan or other facility which enables a customer of the micro-finance institution to access funds or financial guarantees; or
(b) the incurring of liabilities by a micro-finance institution on behalf of a customer with prior written consent as a mechanism for loan disbursement;
"de facto" control of a micro-finance institution by a person means direct or indirect influence of any kind that, results in a person controlling the micro-finance institution and includes any powers exercisable over another micro-finance institution by virtue of such influence;
"de jure" control of a micro-finance institution means beneficial ownership of more than 50 per centum of any class of the issued voting shares of a micro-finance institution;
"deposit" means an amount of money paid to a bank or micro-finance institution in respect of which—
(a) an equal amount or any part thereof is conditionally or unconditionally repayable with or without a premium, on demand or at specified or unspecified dates or on other terms agreed by or on behalf of the person making the payment and the micro-finance institution receiving it; or
(b) no interest is payable or interest is payable at specified or unspecified intervals, notwithstanding that the payment is limited to a fixed amount or that a transferable or non-transferable certificate or other instrument providing for the repayment of the amount referred to in paragraph (a) or the interest referred to in this paragraph is issued in respect of that amount or interest;
"group guarantee" means an agreement by a group of micro-finance borrowers to be held jointly or severally liable for loan repayments in order to secure credit facility;
"lender" means a person, who, as part of business, advances micro credit facilities;
"licence" means a licence issued under Part III of these Regulations;
"loan agreement" means an agreement, acknowledgement of a debt, or any other lending instrument concluded between a lender and a borrower;
"low income customer" means a person who is economically active, receives low income and does not have access to formal financial institutions;
"micro credit" means a credit facility that does not exceed five per centum of the primary capital of a licensed micro-finance institution, as prescribed by the Bank of Zambia;
"micro-finance institution" means a person who, as part of their business, advances micro credit facilities;
"micro-finance service" means the provision of services primarily to small or micro enterprises or low income customers and includes the following—
(a) the provision of credit facilities usually characterised by frequent repayments; and
(b) the acceptance of remittances and any other services that the Bank of Zambia may designate;
"non current account deposits" includes—
(a) savings;
(b) money market instruments;
(c) term deposits; and
(d) non-current account savings;
"non-current account savings" means deposits in retail savings accounts and includes passbook savings;
"person" includes an individual, a company, a partnership, an association, and any other group of persons acting in concert, whether incorporated or not; and
"primary regulator" means—
(a) the Registrar of Companies appointed under the Companies Act;
(b) the Registrar of Societies appointed under the Societies Act; or
(c) the Registrar of Co-operatives appointed under the Co-operative Societies Act;
"Registrar" means the person appointed as Registrar of Banks, Financial Institutions and Financial Businesses under section 20 of the Act;
"savings" means a sum of money provided by a borrower as a partial guarantee or a precondition of a loan, and the immediate placement of such money in a bank or deposit taking financial institution licensed under section 10 of the Act, for the period of the loan; and
"term deposit" means a savings instrument payable upon maturity or which may be discounted upon notice within 360 days.
(1) These Regulations shall apply to—
(a) deposit taking micro-finance institution; and
(b) non deposit taking micro-finance institutions that meet the minimum capital requirements as prescribed by the Bank of Zambia under regulation 26.
(2) A non-deposit-taking micro-finance institution that does not meet the minimum capital requirements as prescribed by the Bank of Zambia under regulation 26 shall—
(a) be regulated by its regulator; and
(b) be required to register a micro-finance institution with such body as may be designated by the Bank of Zambia.
PART II
AUTHORITY OF THE BANK OF ZAMBIA
4. Authority of Bank of Zambia
(1) The Bank of Zambia shall, for the purposes of these Regulations, be regulatory authority.
(2) The Bank of Zambia may, subject to such conditions as the Bank of Zambia may consider necessary, delegate to any person the performance of any of the powers conferred upon the Bank of Zambia, in these Regulations.
5. Power of Bank of Zambia to call for information
The Bank of Zambia may require a micro-finance institution to furnish details of any of its operations.
PART III
LICENSING
6. Prohibition of unlicensed micro-finance services
(1) Subject to sub-regulation (2) of regulation 3, a person, other than a micro-finance institution licensed under these Regulations shall not conduct any micro-finance business.
(2) Any person who contravenes sub-regulation (1) commits an offence and shall be liable, upon conviction, to a fine not exceeding 50,00 penalty units or to imprisonment for a term not exceeding two years, or to both.
(1) A person who intends to establish a micro-finance institution shall apply to the Registrar for a licence in Form MF1, as set out in the First Schedule.
(2) An application for a licence shall be accompanied by a non-refundable application fee and the following documentation or information—
(a) evidence of incorporation, where applicable;
(b) designation of voting rights;
(c) physical and postal address of its head office;
(d) a director’s questionnaire in Form MF2, as set out in the First Schedule;
(e) a copy of the business plan;
(f) the name and address of the person’s bankers; and
(g) any other information that the Bank of Zambia may require.
8. Determination of application
(1) The Registrar shall, within 180 days from the date of receipt of a complete application for a licence, consider the application.
(2) Where the Registrar is satisfied that the applicant has satisfied the requirements for the licensing as a micro-finance institution under these Regulations, the Registrar shall approve the application.
(3) The Registrar shall, where an application is approved and upon payment of a fee by the applicant, issue the applicant with a licence in Form MF3, as set out in the First Schedule.
(4) A micro-finance institution shall pay an addition fee for each additional branch.
(5) Where the Registrar is not satisfied that the applicant has complied with the requirements for licensing as a micro-finance institution under these Regulations the Registrar may refuse to grant a licence.
(6) Any person aggrieved by the decision of the Registrar not to grant a licence under these Regulations, may appeal against the decision in accordance with Chapter VIII of the Act.
9. Scope and duration of licence
(1) A licensee shall conduct the business of a micro-finance institution at the place of business specified in the licence.
(2) A licence shall remain valid unless it is revoked or surrendered to the Registrar or it expires.
(3) A licence may be issued subject to such terms and conditions as the Registrar, may impose in accordance with the Act where it conducts its business.
(1) A micro-finance institution shall display or exhibit its licence in a conspicuous place on the approved premises where it conducts its business.
(2) A micro-finance institution shall display a certified copy of its licence in a conspicuous place on the premises of every branch where it conducts its business.
(3) A person who contravenes sub-regulation (1) or (2) commits an offence and shall be liable, upon conviction, to a fine not exceeding 50,000 penalty units or to imprisonment for a term not exceeding one year, or to both.
(1) A licence shall not be transferred, assigned or encumbered in any way:
Provided that a licence may be transferred in the event of an amalgamation or similar corporate restructuring transaction, on such terms and conditions as the Bank may approve.
(2) A person shall not operate or manage a micro-finance institution on behalf of another person, without the prior written approval of the Bank of Zambia.
(3) Any person who contravenes sub-regulation (1) or (2) commits an offence.
(1) The Registrar may revoke a licence if—
(a) it appears to the Registrar that the information provided in the application for the licence is fraudulent or contains a materially false statement;
(b) the licensee has failed, within a period of 12 months from the date of issuance of the licence, to commence to conduct business under the licence;
(c) the licensee is seriously or persistently in breach of any provision of these Regulations;
(d) the licensee has failed to comply with any conditions of its licence or with any directive of the Bank of Zambia;
(e) the licensee has ceased to conduct the business authorised by its licence.
(2) Where a licence is revoked, the licensee shall surrender to the Registrar each copy of the licence on display in every place of business of the licensee and the Registrar shall as soon as practicable publish a notice of the revocation in the Gazette in a newspaper of general circulation in Zambia.
(3) The Bank of Zambia may take such additional steps as it considers necessary to inform the public of the revocation.
(4) Any person aggrieved by the decision of the Registrar to revoke a licence may appeal to the Tribunal constituted under section 113 of the Act.
(5) A decision of the Registrar shall remain in force unless reversed by the Registrar or set aside by the Tribunal or the High Court.
(6) A person whose licence is revoked shall not continue to operate as a micro-finance institution or conduct any micro-finance business.
(7) Any person who contravenes sub-regulation (6) commits an offence and shall be liable, upon conviction, to a fine not exceeding 50,000 penalty units or imprisonment for a term not exceeding two years, or to both.
13. Licensee to honour obligations in spite of revocation of licence
The revocation of a licence shall not relieve the licensee of any obligation incurred or assumed by the licensee during the period of validity of the licence.
PART IV
CATEGORIES OF MICRO-FINANCE INSTITUTIONS
14. Categories of micro-finance institutions
Subject to the other provisions of these Regulations, the Registrar may grant a licence for the following categories of micro-finance institutions—
(a) deposit taking micro-finance institutions; and
(b) non-deposit-taking micro-finance institutions.
15. Services to be provided by deposit taking micro-finance institution
A deposit taking micro-finance institution may provide any of the following services—
(a) credit facilities;
(b) linkage banking;
(c) in-country transfers;
(d) savings; and
(e) such other services as the Bank of Zambia may prescribe.
16. Services to be provided by non-deposit taking micro-finance institution
A non-deposit taking micro-finance institution shall not provide services other than credit facilities.
17. Applicant to designate persons to cover losses etc.
An applicant for a deposit taking micro-finance institution or a non-deposit taking micro-finance institution that is not a company, shall be required to—
(a) designate the persons legally bound to cover losses and capital calls; and
(b) fulfil the requirements of section 37A of the Act, as prescribed by the Bank of Zambia.
18. Prohibition of change of category without approval of Registrar
Subject to the provisions of these Regulations a micro-finance institution shall not change the category for which it is licensed without the approval of the Registrar.
19. Change of category of licence
(1) A micro-finance institution which intends to change the category of its licence shall apply to the Registrar for the change 90 days prior to the intended change.
(2) An application under sub-regulation (1) shall be in Form MF4 as set out in the First Schedule.
PART V
GOVERNANCE OF A MICRO-FINANCE INSTITUTION
20. Structure of micro-finance institution
(1) A micro-finance institution shall have a board of directors constituting of not less than five members, the majority of whom shall be permanent residents in Zambia.
(2) Members of a board of directors should be capable of demonstrating an understanding of the financial institution’s financial standing and reporting requirement.
(3) A board of directors of the institution shall meet at least once quarterly for the transaction of its business.
21. Management of micro-finance institution
(1) The management of a micro-finance institution shall include—
(a) a chief executive officer; and
(b) a chief financial officer.
(2) The positions referred to in sub-regulation (1) shall not be held by one person.
22. Systems of internal control
A micro-finance institution shall, at all times maintain systems of internal control.
23. Qualification of Director or person in management of micro-finance institution
A person shall not be appointed as a Director, chief executive officer, chief financial officer or manager of a micro-finance institution if that person—
(a) is not a fit and proper person to hold the office in relation to that person’s integrity and relevant knowledge;
(b) is not a natural person;
(c) is below the age of 21 years;
(d) is an undischarged bankrupt;
(e) has been convicted of a felony or any offence involving dishonesty;
(f) has been declared or otherwise adjudged in any official proceedings to be mentally unsound;
(g) is under suspension or has been removed from office by order of the Bank of Zambia;
(h) has been a Director, chief executive officer, chief financial officer or manager of a bank or financial institution whose licence has been revoked or a company which has been adjudged insolvent or has entered into any other arrangement with creditors or taken any other action with similar effect in Zambia or elsewhere, unless that person was not responsible for the insolvency, liquidation, composition with creditors or other action with similar effect unless the Bank of Zambia has given approval for that person to act or continue to act as a Director or to be directly concerned in the management of a micro-finance institution.
24. Suspension or removal of officers
(1) The Bank of Zambia may, by notice in writing addressed to the person concerned, suspend for a period not exceeding six months, a Director, chief executive officer, chief financial officer or manager of a micro-finance institution for failure to take reasonable steps to secure the compliance by the micro-finance institution with the requirements of these Regulations.
(2) The Bank of Zambia may recommend to a micro-finance institution the removal from office of a Director, a chief executive officer, a chief financial officer or a manager referred to in sub-regulation (1) without first suspending the Director, chief executive officer, chief financial officer or manager.
25. Immunity of Registrar etc.
No act, matter or thing done by the Registrar or any officer or person employed by the Bank in exercise of performance or purported exercise or performance, in good faith, of any power or function under these Regulations shall give rise to any action, claim, liability, suit or demand against the Registrar or any officer or person concerned.
PART VI
OPERATION OF MICRO-FINANCE INSTITUTION
26. Minimum primary and regulatory capital
(1) The Bank of Zambia shall prescribe—
(a) the minimum primary and regulatory capital of a micro-finance institution; and
(b) the conditions under which funds may be recognised and measured as capital of a micro-finance institution:
Provided that for purposes of paragraph (a) the minimum capital of a micro-finance institution shall be as set out in Part I of the Second Schedule.
(2) The Bank of Zambia shall take appropriate supervisory action in accordance with sections 81 to 84 of the Act in the case of a micro-finance institution which contravenes the provisions of those sections.
(3) A deposit taking micro-finance institution that is operating at the date of the coming into force of these Regulations that does not meet the minimum capital requirements shall be required to build up its capital to the prescribed level not later than two years from the coming into force of these Regulations.
(4) Any Director or person concerned in the management of a micro-finance institution referred to in sub-regulation (3) who fails to take reasonable steps to secure the compliance by the micro-finance institution with sub-regulation (3) commits an offence.
A micro-finance institution which provides credit facilities to any of its directors or members of staff or related persons shall do so in accordance with the regulations of the Bank of Zambia on insider lending.
28. Prudence in business conduct
A micro-finance institution shall—
(a) conduct its business with integrity, prudence and professional skill;
(b) focus on the institutional sustainability of service to its target customers; and
(c) engage only in bona fide transactions.
A micro-finance institution shall not extend credit to one person in excess of such sum as may be prescribed by the Bank of Zambia from time to time.
30. Disclosure of cost of borrowing
(1) A deposit taking micro-finance institution that provides credit facilities to a customer shall at the time of providing the service, in a statement in writing, disclose to the customer concerned the cost of borrowing.
(2) The statement referred to in sub-regulation (1) shall be in Form MF5, set out in the First Schedule.
31. Micro-finance institution to display customer rights, responsibilities, etc.
A micro-finance institution shall display in a conspicuous place on the premises of every branch where it conducts business a notice containing—
(a) a clear and simple summary of the business conducted by the micro-finance institution;
(b) information on customer rights and responsibilities;
(c) details of the financial products offered; and
(d) the terms under which any financial product is offered.
32. Branches of existing micro-finance institution
Unless the conditions of a licence limit or restrict a financial institution to one or more specific sites or locations, a micro-finance institution may conduct business at any place or places in Zambia:
Provided that within 14 days of opening a new branch, a micro-finance institution shall notify the Bank of Zambia, in writing, of the fact and of its location.
33. Closure of micro-finance institution
A micro-finance institution intending to close a place of business shall at least 60 days before closing such place, notify the Bank of Zambia, in writing, of its intention to do so.
34. Notice of change in shareholding, directors or senior management
A micro-finance institution shall not without the prior written approval of the Bank of Zambia make any changes regarding its shareholders, directors, chief executive officer, chief financial officer or any manager.
(1) A deposit taking micro-finance institution shall be—
(a) a company incorporated under the Companies Act; or
(b) a body corporate, created under an Act of Parliament, that is recognised by the Bank of Zambia as an acceptable form of a financial institution and falls, within a defined category of financial institution, as determined by the Bank of Zambia;
(2) A person shall not, without the written approval from the Bank of Zambia—
(i) acquire any beneficial interest in the voting shares of a deposit taking micro-finance institution; or
(ii) enter into any voting trust or other agreement;
that would enable that person or another person to control more than 25 per centum of the total votes cast on any general resolution at a general or special meeting of a deposit taking micro-finance institution.
(3) A non-deposit taking micro-finance institution may be—
(a) a company incorporated under the Companies Act;
(b) a non-governmental organisation registered under the Societies Act; or
(c) a co-operative registered under the Co-operative Societies Act.
(4) Where a non-deposit taking micro-finance institution is incorporated under the Companies Act, a person shall not, without the prior written approval of the Bank of Zambia—
(a) acquire any beneficial interest in the voting shares of such a non-deposit taking micro-finance institution; or
(b) enter into any voting trust or other agreement;
that would enable that person or another person to control more than 50 per centum of the total votes cast on any general resolution at a general or special meeting of the non-deposit taking micro-finance institution.
36. Control of micro-finance institution
(1) A person who has de jure or de facto control of a micro-finance institution, shall not acquire or maintain de jure or de facto control of any other micro-finance institution.
(2) Any person who has de jure or de facto control of more than one micro-finance institution, shall within a period of two years of the date of the coming into force of these Regulations, comply with the provisions of sub-regulation (1).
(3) A person who contravenes sub-regulation (2) commits an offence.
PART VII
SUPERVISION OF MICRO-FINANCE INSTITUTIONS
37. Inspection of micro-finance institutions
(1) The Bank of Zambia or any person authorised by the Bank of Zambia, may at any time cause an inspection to be made of any micro-finance institution and of its books or accounts at any place where the micro-finance institution conducts its business.
(2) The micro-finance institution shall cause its books and accounts to be produced to an inspector and shall ensure that its staff furnishes such information as the inspector may reasonably require for the purposes of the inspection.
(3) Any person who obstructs, hinders or endeavours to obstruct an inspector or hinder any inspection of a micro-finance institution or its books and accounts commits an offence.
38. Submission of returns by micro-finance institution
(1) The Bank of Zambia shall prescribe reporting formats and the frequency of reporting for a micro-finance institution, including—
(a) balance sheets;
(b) income statements;
(c) computation of capital;
(d) computation of schedules;
(e) liquidity statements;
(f) loan repayments schedule; and
(g) such other information that the Bank of Zambia may consider necessary.
(2) A micro-finance institution which contravenes sub-regulation (1) commits an offence and shall be liable, upon conviction, to a fine not exceeding 1,000 penalty units and in the case of a continuing breach, to a fine of 500 penalty units for every day during which the breach continues.
(1) A micro-finance institution shall submit the following information to the Bank of Zambia, its shareholders and other interested persons—
(a) in the case of a micro-finance institution, which is a company, an audited financial statement or management accounts; and
(b) in the case of a micro-finance institution, which is not a company—
(i) management accounts; and
(ii) where available, audited accounts.
(2) A micro-finance institution intending to enter into any significant business arrangement, joint venture or financial arrangement with another micro-finance institution, bank or any other person, shall notify the Bank of Zambia 30 days prior to the proposed agreement.
A deposit-taking micro-finance institution shall display a balance sheet and income statement in a conspicuous place on its business premises.
Every micro-finance institution shall pay to the Bank of Zambia an annual on-refundable supervision fee as et out in Part II of the Second Schedule.
Every micro-finance institution shall maintain liquid assets as defined in the Act, in ratios and measures determined by the Bank of Zambia.
PART VIII
GENERAL PROVISIONS
(1) Subject to sub-section (2) where a person issues or takes part in the issuance of a document which is false in any material particular, the person and every other person who signed such document commits an offence and shall be liable, upon conviction, to a fine not exceeding 50,000 penalty units or to imprisonment for a term not exceeding two years, or to both.
(2) A person does not commit an offence under this regulation if the person did not know and could not reasonably be expected to have known that the document was false when the person signed it, issued it or took part in its issue.
44. Confidentiality of transactions
A micro-finance institution and its staff shall ensure that all transactions are conducted in strict confidence and that the confidentiality of customers is maintained.
The Bank of Zambia may for purposes of these Regulations require a person to submit vital statistics in Form MF6 as set out in the First Schedule.
The fees set out in Part II of the Second Schedule shall be payable in respect of the matters specified therein.
Any person who—
(a) obstructs any person in the exercise of any power conferred upon the person under these Regulations;
(b) fails to provide information required under these Regulations;
(c) with intent to evade any provisions of these Regulations destroys, mutilates or hides any document;
(d) contravenes a duty imposed by these Regulations;
commits an offence and is liable, upon conviction, to a fine not exceeding 50,000 penalty units or to imprisonment for a term not exceeding two years, or to both.
48. Offences by body corporate
Where the offence is committed by a body of persons—
(a) in the case of a body corporate, every Director or officer of that body commits an offence;
(b) in the case of a micro-finance institution that is not incorporated, every manager, partner or member of the board of directors commits an offence;
unless the Director, officer, partner or manager proves to the satisfaction of the court that the act constituting an offence was done without the knowledge, consent or connivance of the Director, officer, partner or manager, or that, the person attempted to prevent the commission of the crime having regard to the circumstances of the case.
Any person who contravenes the provisions of these Regulations for which no penalty is provided shall be liable, upon conviction, to a fine not exceeding 50,000 penalty units or to a term of imprisonment not exceeding two years, or to both.
50. Compliance by existing micro-finance institution
(1) Subject to sub-regulation (2) a micro-finance institution which is in existence on the commencement of those Regulations shall apply for an appropriate licence within 30 days from the commencement of these Regulations.
(2) Except for the requirement on ownership and capital adequacy, an existing micro-finance institution shall comply with these Regulations within six months from commencement of these Regulations.
(3) An existing micro-finance institution within any legal person that is not a registered financial institution shall be registered separately as a legal person in accordance with these Regulations and shall pay such application fee as may be determined by the Bank of Zambia.
[Regulations 7, 8, 19, 30 and 45]
FORM MF 1
THE BANKING AND FINANCIAL SERVICES (MICRO-FINANCE) REGULATIONS, 2006
[Regulation 7]
BANK OF ZAMBIA
APPLICATION FOR REGISTRATION AND OPERATING AND AS A MICRO-FINANCE INSTITUTION IN ZAMBIA
(Please read the entire Form before completing in block capitals)
1. NAME OF APPLICANT (Organisation) .................................................................................................................................
2. (a) PHYSICAL ADDRESS OF APPLICANT’S HEAD OFFICE ..............................................................................................
(b) PHYSICAL ADDRESS (ES) OF APPLICANT’S BRANCH(ES) .................................................................................
3. APPLICANT’S POSTAL ADDRESS ....................................................................................................................................
4. CONTACT TELEPHONE NUMBER ............................................................................................................................... (Please state country and area codes if based outside the Republic of Zambia).
5. CONTACT FACSIMILE NUMBER ...............................................................................................................................(Please state country and area codes if based outside the Republic of Zambia).
6. E-MAIL ADDRESS (Use small letters as per standard)
7. NATURE OF LICENCE SOUGHT (Tick the appropriate box)
deposit-taking micro-finance licence
Non-deposit taking micro-finance licence
8. PROPOSED BOARD OF DIRECTORS/GOVERNMENT BODY: STATE NAME, NATIONALITY AND WHETHER RESIDENT OR NON-RESIDENT
(Non-executive directors or non-executive members of the governing body must be in the majority and more than half the directors or members of the governing body must reside within the Republic of Zambia)
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Name |
Nationality |
Resident/Non-Resident |
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9. THE SHARE CAPITAL OF THE MICRO-FINANCE INSTITUTION
(a) Authorised capital ....................................................................................
(b) Issued capital ..........................................................................................
(c) Paid up capital .........................................................................................
(Documentary evidence of paid up capital must accompany the application. For example, bank statement and written assurance by external auditor: If part of the paid up capital is in form of fixed assets, the Registrar may appoint a valuer to assess the value of such assets at the applicant’s expense. Such assets must be essential to the operation of a micro-finance business. Documentary evidence of title to the assess must be made available to the Registrar on demand).
(d) State the source of capital ........................................................................
10. (a) SHAREHOLDERS OR SHAREHOLDING OF THE MICRO-FINANCE INSTITUTION
(Note: The Banking and Financial Services Act prohibits trusts from owning shares either directly or indirectly in a bank or financial institution)
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Name |
Number of Shares |
Per Cent of Total Shares |
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.................................. |
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(b) WHERE SOME SHAREHOLDERS MENTIONED IN 10 (A) ABOVE ARE NATURAL PERSONS STATE THEIR NAMES, NATIONALITY AND PLACE OF PERMANENT RESIDENCE:
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Name |
Nationality |
Place of Permanent Residence |
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.................................. |
.................................. |
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.................................. |
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(c) WHERE SOME SHAREHOLDERS MENTIONED IN 10 (a) ABOVE ARE UNNATURAL PERSONS/CORPORATE BODIES, STATE THEIR NAMES AND PLACE OF REGISTRATION/INCORPORATION
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Name |
Place of Registration/Incorporation |
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........................................................... . |
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(d) STATE BELOW THE NAMES OF NATURAL PERSONS WHO ARE BENEFICIAL OWNERS OF SHARES IN THE UNNATURAL PERSONS/CORPORATE BODIES MENTIONED IN 10 (c) ABOVE:
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Corporate Body |
Shareholder |
per cent of Total Shares |
| .................................. |
....................................................................
..................................................................................................................................................................................................................................................................................................................
11. (a) BUSINESS/COMPANIES ASSOCIATED/AFFILIATED WITH DIRECTORS/GOVERNING BODY MEMBERS’ IMMEDIATE FAMILY MEMBERS OR BUSINESS/COMPANIES IN WHICH DIRECTORS/GOVERNING BODY MEMBERS’ IMMEDIATE FAMILY MEMBERS HOLD A SUPERIOR POSITION IN ZAMBIA.
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Family Member’s Name |
Business Interests |
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............................................................ |
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........................................................... |
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........................................................... |
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(b) BUSINESS/COMPANIES ASSOCIATED/AFFILIATED WITH DIRECTORS/MEMBERS OF THE GOVERNING BODY/BUSINESS/COMPANIES IN WHICH DIRECTORS/GOVERNING BODY MEMBERS HOLD A SUPERIOR POSITION IN ZAMBIA.
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Family Member’s Name |
Business Interests |
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........................................................... |
............................................................ |
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........................................................... |
........................................................... . |
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........................................................... |
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12. IN THE CASE OF A FOREIGN-OWNED/CONTROLLED MICRO-FINANCE INSTITUTION
(That is, if more than 50% of voting shares are held by non-Zambians residents/corporations registered outside Zambia and are part of an international banking/financial micro-finance group).
(a) Certificate of the regulatory authority governing bank/financial institutions/micro-finance institutions of the country or political subdivision of the country in which the head office of the bank/financial institution/micro-finance institution, is domiciled, certifying that the bank/financial institution/micro-finance institution has been duly incorporated or established and when it was established by, pursuant to, or in accordance with the laws of that country or political subdivision and the title or citation of these laws.
................................................................................................................
................................................................................................................
(b) A certified copy of the resolution of the directors of the bank/financial institution/micro-finance institution authorising the establishment of the subsidiary in Zambia.
(c) State who is going to perform the consolidated supervision of the group and whether the said supervisor is aware of the applicant’s plan to set up business in Zambia.
(d) Organisation (organisation chart) showing how the applicant fits in the group.
................................................................................................................
13. DETAILS OF THE PROPOSED SENIOR EXECUTIVES OF THE MICRO-FINANCE INSTITUTION TO BE REGISTERED.
(Please attach curriculum vitae of each one of them).
(a) CHIEF EXECUTIVE OFFICER/MANAGING DIRECTOR:
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Name |
Nationality |
Academic/Professional Qualification |
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(Certified copies of certificates to be attached)
14. NAME AND ADDRESS OF APPLICANT’S PROPOSED AUDITORS
(where applicable)
.............................................................................................................................
15. PLEASE LODGE WITH THIS APPLICATION THE FOLLOWING DOCUMENTS RELATING TO THE MICRO-FINANCE INSTITUTION TO BE REGISTERED:
(a) Articles of Association/Member’s Rules/Designation of voting rights and subordination of claims to depositors and other creditors;
(b) Evidence of incorporation/registration;
(c) Duly completed directors/governing body members questionnaire;
(d) Documentation indicating the location of the micro-finance institution;
.............................................................................................................................
(e) business plan; and
(f) projected balance sheet and income statement with relevant assumptions for at least 3 years.
16. DOCUMENTS RELATING TO THE PROMOTERS/SHAREHOLDERS OF THE MICRO-FINANCE INSTITUTION TO BE REGISTERED IN CASE THEY ARE CORPORATE BODIES/UNNATURAL PERSONS:
(a) Articles of Association/Members’ Rules;
(b) Evidence of incorporation/registration; and
(c) Audited balance sheet and income statement for the last completed financial year immediately preceding the application.
17. *I/WE HEREBY CERTIFY THAT TO THE BEST OF MY/OUR KNOWLEDGE AND BELIEF THAT THE INFORMATION GIVEN ABOVE IS CORRECT AND TRUE.
18. CHAIRMAN .............................................................................................................................
(Signature)
.............................................................................................................................
(Full names)
19. CHIEF EXECUTIVE OFFICER .........................................................................
(Signature)
.........................................................................
(Full names)
20. DATE ................................. PLACE ..................................................
(Date, month, year) (City/town, country)
*Delete where not applicable
Note: Where the space provided in this Form is insufficient to furnish required details, please use a separate sheet of paper indicating the relevant item of the application Form. The Chairman/chief executive officer or any duly authorised representative of the applicant should duly sign such attachment(s).
FORM MF 2
THE BANKING AND FINANCIAL SERVICES (MICRO-FINANCE) REGULATIONS, 2006
BANK OF ZAMBIA
DIRECTORS’ QUESTIONNAIRE
[Regulation 7]
STATEMENT BY INDIVIDUALS WHO ARE HOLDING, OR ARE PROPOSING HOLD, THE OFFICE OF A DIRECTOR OR EXECUTIVE OFFICER OF A MICRO-FINANCE INSTITUTION OR A CONTROLLING COMPANY
(If insufficient space is provided, please attach a separate sheet)
(Confidential and not available for inspection by the public)
1. Name of institution in connection with which this questionnaire is being completed (A the institution):
…………………………………………………………………………………………………………………………………
2. Your surname
…………………………………………………………………………………………………………………………………
3. Your full forename(s)
…………………………………………………………………………………………………………………………………
4. Former surname (s) and or forename (s) by which you may have been known:
…………………………………………………………………………………………………………………………………..
5. Please state in what capacity you are completing this questionnaire, i.e. as a current or prospective Director, executive officer or combination of these. Please state your full title and describe the particular duties and representatives attaching to the position (s) that you hold or will hold. If you are completing this Form in the capacity of Director, indicate whether, in your position as Director, you have or will have executive responsibility for the management of the institution’s business. In addition, please provide a copy of your curriculum vitae, unless it has already been provided.
…………………………………………………………………………………………………………………………………
6. Residential address
…………………………………………………………………………………………………………………………………
7. Any previous residential address (es) during the past 10 years;
…………………………………………………………………………………………………………………………………
8. Date and place of your birth (including town or city)
………………………………………………………………………………………………………………………………….
9. Your nationality and how it was acquired (birth, naturalisation or marriage):
…………………………………………………………………………………………………………………………………..
10. Name (s) and address (es) of your bankers during the past 10 years:
…………………………………………………………………………………………………………………………………..
11. Your professional qualifications and year in which they were obtained:
…………………………………………………………………………………………………………………………………..
12. Your occupation and employment now and during the past 10 years, including the name of your employer in each case, the nature of the business, the position held and relevant dates:
.…………………………………………………………………………………………………………………………………
13. Of what bodies corporate (other than the institution) are you a Director or an executive officer and since when?
…………………………………………………………………………………………………………………………………..
14. Do you have any direct or indirect interest representing 15 per centum or more of the issued capital of any corporate (other than the institution) that is now registered, or has applied for authorisation, under the Act? If so give particulars:
………………………………………………………………………………………………………………………………..
15. Of what bodies corporate other than the institution and those listed in reply to Question 13 have you been a Director or an executive officer at any time during the past 10 years? Give relevant dates:
………………………………………………………………………………………………………………………………….
16. Do any of the bodies corporate listed in reply to Questions 12, 13, 14 and 15 maintain a business relationship with the institution? If so, give particulars:
…………………………………………………………………………………………………………………………………
17. Do you hold or have you ever held or applied for a licence or equivalent authorisation to carry on any business activity in Zambia or elsewhere? If so, give particulars. If any such application was refused or withdrawn after it was made or any authorisation was revoked, give particulars:
………………………………………………………………………………………………………………………………….
18. Does any institution with which you are, or have been associated as a Director or executive officer hold, or has it ever held or applied for a licence or equivalent authorisation to carry on any business activity? If so, give particulars. If any such application was refused, or was withdrawn after it was made or an authorisation revoked, give particulars:
………………………………………………………………………………………………………………………………….
19. Have you at any time been convicted of any offence, excluding:
(a) any offence committed when you were under 18 years, unless the same was committed within the last 10 years.
(b) any road traffic offence; or
(c) any political offence?
If so, give particulars of the court by which you were convicted, the offence, penalty imposed and the date of the conviction:
…………………………………………………………………………………………………………………………………
20. Have you, in Zambia or elsewhere, been censured, disciplined, warned against some conduct, or made the subject of a court order at the instigation of a regulatory authority or professional body to which you belong or belongs? Have you ever held a practising certificate subject to conditions? If so, give particulars:
…………………………………………………………………………………………………………………………………..
21. Have you, or has any body corporate, partnership or unincorporated institution which you are, or have been associated as a Director or executive officer, been subject of an investigation, in Zambia or elsewhere, by or at the instigation of a government department or agency, professional association or other regulatory body? If so, give particulars:
…………………………………………………………………………………………………………………………………..
22. Have you, in Zambia or elsewhere, been dismissed from any office employment, or subject to disciplinary proceedings by your employer or barred from entry to any profession or occupation? If so, give particulars:
…………………………………………………………………………………………………………………………………..
23. Have you ever been declared insolvent (either provisionally or finally) by a court in Zambia or elsewhere, or has a bankruptcy petition ever been served on you? If so, give particulars:
…………………………………………………………………………………………………………………………………
24. Have you, in connection with the formation or management of any body corporate, partnership or unincorporated institution, been adjudged by a court in Zambia or elsewhere, civilly liable for any fraud, misfeasance or other misconduct by you towards any members thereto? If so, give particulars:
…………………………………………………………………………………………………………………………………
25. Has any body corporate, partnership or unincorporated institution with which you were associated as a Director or executive officer, or executive officer, in Zambia or elsewhere, been wound up, made subject to an administration order, otherwise made any compromise or arrangement with its creditors or ceased trading, either while you were associated with it or within one year after you ceased to be associated with it, or has anything analogous to any of these sevens occurred under the laws of any other jurisdiction? If so, give particulars:
…………………………………………………………………………………………………………………………………
26. Have you been concerned with the management or conduct of the affairs of any institution that, by reason of any matter relating to a time when you were so concerned, has been censured, warned as to future conduct, disciplined or made the subject of a court order at the instigation of any regulatory authority in Zambia or elsewhere? If so, give particulars:
…………………………………………………………………………………………………………………………………
27. In carrying out your duties will you be acting on the directors or institutions of any other individual or institution? If so, give particulars:
………………………………………………………………………………………………………………………………….
28. Do you, or does any related party of whom you are aware, undertake business with this institution? If so, give particulars:
………………………………………………………………………………………………………………………………….
29. How many shares in the institution are registered in your name or the name of a related party? If applicable, give name (s) and class of shares:
…………………………………………………………………………………………………………………………………
30. In how many shares in the institution (not being registered in your name or that of a related party) are related parties beneficially interested?
……………………………………………………………………………………………………………………………………
31. Do you, or does any related part, hold any shares in the institution as trustee or nominee? If so, give particulars:
…………………………………………………………………………………………………………………………………
32. Are any of the shares in the institution mentioned in reply to Questions 29, 30 and 31 equitable or legally charged or pledged to any party? If so, give particulars:
………………………………………………………………………………………………………………………………..
33. What proportion of the voting power at any general meeting of the institution (or of another body corporate of which it is a subsidiary) are you to any related party entitled to exercise or control the exercise?
…………………………………………………………………………………………………………………………………
34. If the exercise of the voting power at any general meeting of the institution, or of another body corporate of which it is a subsidiary, is or may be controlled by one or more of your associates or any related party, give the proportion of the voting power so controlled in each case and identity of each associate.
…………………………………………………………………………………………………………………………………
35. Are you currently, or do you, other than in a professional capacity, expect to be, engaged in any litigation in Zambia or elsewhere? If so, give particulars.
…………………………………………………………………………………………………………………………………
36. Do you have a basic knowledge and understanding of the risks to which financial institutions are exposed?
…………………………………………………………………………………………………………………………………
37. Do you, at all times while acting in your capacity as a Director or executive officer of the institution, undertake to:
(a) act in good faith towards the financial institution(s) in the group;
(b) avoid conflicts between your other interests and the interest of the financial institution(s) in the group; and
(c) place the interest of the financial institution(s) in the group and the depositors above all other interests?
………………………………………………………………………………………………………………………………
38. Have you acquainted yourself with, and do you understand, the extent of the rights and powers, as well as your responsibilities and duties and duties as a Director of the institution, as contained in the applicable law? (To be completed only by directors or prospective directors.)
…………………………………………………………………………………………………………………………………
DECLARATION
I, …………………………………………………………………………………… hereby declare the following:
This statement consists of ………………………………. pages, each signed by me. The content of this declaration is true to the best of my knowledge and belief. I am aware that should it be submitted as evidence and I know the contents to be false or not to be true, whether in part or in full, I may be liable to prosecution.
I understand that for as long as I continue to be a Director or executive officer of the institution, I will notify the Registrar of any material changes to, or affecting the completeness or accuracy of, the information supplied by me in items 1 – 39 as soon as possible, but in any event not later than 21 days from the day the changes come to my attention.
I know and understand the content of this declaration. I have*/do not have* objections to taking the prescribed oath.
I consider the prescribed oath to be binding */not binding* on my conscience.
…………………………………………………………………………………… SIGNATURE OF DEPONENT
I certify that the above statement was taken by me and that the deponent has acknowledged that he/she* knows and understands the contents of this statement. This statement was sworn to/affirmed* before me and the deponent’s signature was placed thereon in my presence at …………………………… on this ………………………….. day of ……………………………… 20 ..
COMMISSIONERS OF OATHS
FULL NAMES: ………………………………………………………………………..
EX OFFICIO: ………………………………………………………………………….
AREA: ………………………………………………………………………….
ADDRESS: …………………………………………………………………………..
DECLARATION BY CHAIRMAN OF A FINANCIAL INSTITUTION OR AUDITOR IN CASE OF A NEW FINANCIAL INSTITUTION
I, the undersigned ………………………………………………………………………………………………………
being Chairman of the Board or Director/auditor* of ……………………………, confirm that I have carefully studies all information supplied in this statement and, after discussion with the deponent …………………………………………………………………………………… and all other members of the Board, and after having taken into account any other information at my disposal or that has come to my attention, am of the opinion that the deponent office in this institution. In the case of the appointment of a Director I confirm that the appropriate conditions of the articles of association of the company have been complied with. Similarly, in the case of the appointment of a chief executive officer, I confirm that company policy has been complied with.
NAME: ………………………………………………………………………………
SIGNED: …………………………………………………………………………..
DATE: …………………………………………………………………………….
*Delete whichever is not applicable.
FORM MF 3 (a)
THE BANKING AND FINANCIAL SERVICES (MICRO-FINANCE) REGULATIONS, 2006
BANK OF ZAMBIA
LICENCE TO OPERATE A NON-DEPOSIT TAKING MICRO-FINANCE INSTITUTION
[Regulation 8]
| Serial No. ………………………….. Licence Number: …………………. |
This is to certify that …………………………………………………………………………………………………………………………………… is licensed to carry on the business of micro finance services at ……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….. This licence has been issued under the Banking and Financial Services Act and (Micro finance) Regulations, 2004 and shall remain valid until it expires, is revoked or surrendered to the Registrar, subject to the provisions of the Act or the said Regulations .……………………………………… ………………………………… Registrar ............................. Date
FORM MF 3 (b)
THE BANKING AND FINANCIAL SERVICES (MICRO-FINANCE) REGULATIONS, 2006
BANK OF ZAMBIA
LICENCE TO OPERATE A DEPOSIT TAKING MICRO-FINANCE INSTITUTION
[Regulation 8]
| Serial No. ………………………………. Licence Number: ………………….. |
| This is to certify that …………………………………………………………………………………………………………………………………… is licensed to carry on the business of micro finance services at ……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….. This licence has been issued under the Banking and Financial Services Act and (Micro finance) Regulations, 2004 and shall remain valid until it expires, is revoked or surrendered to the Registrar, subject to the provisions of the Act or the said Regulations .……………………………………… ………………………………… Registrar ............................................. Date |
FORM MF 4
THE BANKING AND FINANCIAL SERVICES (MICRO-FINANCE) REGULATIONS, 2006
BANK OF ZAMBIA
APPLICATION FOR CHANGE OF CATEGORY OF MICRO-FINANCE
INSTITUTION’S LICENCE
[Regulation 19]
[Please read the Form before completing in block letters. A duly signed resolution of the board of directors authorising change of category of licence of category of licence must be attached to the application]
1. Name of applicant (the organisation)........................................................
2. Category of Current Micro-finance Licence (Tick appropriate box):
[ ] Deposit-Taking Micro-finance Licence
[ ] Category of Current Micro-finance Licence
[ ] Non-Deposit-Taking Micro-finance Licence
3. Category of Current Micro-finance Licence (Tick appropriate box):
[ ] Deposit-Taking Micro-finance Licence
[ ] Non-Deposit-Taking Micro-finance Licence
4. Reason (s) for seeking change of category of licence
.................................................................................................................................
.................................................................................................................................
.................................................................................................................................
5. Total asset size (on date of application)...............................................................
(State fixed assets net of depreciation).
6. Loan size (net) (on date of application) ...............................................................
7. Primary Capital (on date of application)...............................................................
8. Total saving (on date of application) .....................................................................
9. Delete whichever is not applicable. ')">*I/WE HEREBY CERTIFY THAT THE ABOVE INFORMATION IS CORRECT AND TRUE.
10. Chairman of the board (Full names) .............................................................................
...............................................................
(Signature)
11. Chief executive officer (Full names) ...............................................................
...............................................................
(Signature)
12. Date ............................................................... place ...............................................................
(Date, month, year) (City/town)
FORM MF 5
THE BANKING AND FINANCIAL SERVICES (MICRO-FINANCE) REGULATIONS, 2006
BANK OF ZAMBIA
CONTENTS OF DISCLOSURE STATEMENT
[Regulation 30]
1. The name and address of the Micro-finance Institution.
2. The name and address of the borrower.
3. A description of any property to be used as security and its location.
4. A description of any guarantee of other collateral.
5. The date when the first payment on the loan is due.
6. In the case of any Mortgage, whether it is first, second, etc.
7. The principle of the loan, including:
(a) the total amount of all charges to be financed; and
(b) the net amount of money to be paid to the borrower or to be disbursed at the borrower’s discretion.
8. The rate of interest expressed as a rate per annum, if that rate does not vary.
9. The initial rate of interest expressed as a rate per annum, if the rate varies from time to time.
10. A description of any factors that would cause the rate of interest to vary.
11. The length of the term of the loan.
12. The period during which an offer to a customer is valid before it expires.
13. A description of any factors that would cause the term of the loan to vary.
14. The total cost of borrowing over the term of the loan expresses as a rate varies from time to time.
15. A list of each charge to be financed
16. A description of any terms and conditions applicable to pre-payment of the principle
17. A description of any charge or penalty that would be imposed for failure to make any payment or to repay the loan when due.
18. The date of statement
19. The name and signature of the representative of the Micro-finance Institution.
FORM MF 6
THE BANKING AND FINANCIAL SERVICES (MICRO-FINANCE) REGULATIONS, 2006
[Regulation 45]
BANK OF ZAMBIA
VITAL STATISTICS FORM
Part A (This Part Applies to Zambian Citizens Only)
Name: …………………………………………………………………………………………………………
Date of birth: ………………………………………………………………………………………………….
Identity card number: …………………………………………………………………………………….….
Residential address: …………………………………………… Telephone No. ………………....……
Business address: …………………………………………………Telephone No. ……………….….…
Marital status: ……………………………………….. No. of children …………………....……………
Passport No./NRC No.: …………………Expiry date (Passport No./NRC indicate): ………..………..
Name of Spouse: ……………………………………………….. Identity card No.: …………………….
Next of kin: ……………………………………………… Name of parents: ……………………....…….
PART B (This Part Applies to non-Zambian Citizens Only)
Name: ……………………………………......................................................................................……
Residential address: ……………………………………................................................................................................................................................................................................................................................................................
Immigration Permit No: ………………………………………… Passport No.: ……………………...………
Expiry date of passport: ………………………....……… Date of entry into Zambia: ……………….....…..
Work permit No.: ……………………………………. Valid from …………………….. to ………………………
PART B (Applies to both Zambians and non-Zambians)
Education Background: …………………………………………………………………………………………………....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Employment Record: ………………………………………………………………………………………………........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Last Employer: …..…………………………………..................................................................................................................................................................................…………………………………………………………………………
Employer’s reference: ………………………………………………………………………………………………….....................................................................................................................................................................................................
Signature: …………………………
[Regulations 26, 41 and 46]
PART I
CAPITAL REQUIREMENTS FOR MICRO-FINANCE INSTITUTIONS
[Regulation 26]
|
Minimum Capital Requirement |
Deposit Taking MFI |
Non Deposit-Taking MFI |
|
K250 Million |
K25 Million |
PART II
PRESCRIBED FEES
[Regulations 41 and 46]
|
Deposit-Taking Micro-finance Micro-finance |
Non Deposit-Taking Micro-finance Institution |
|
|
Licence application fee |
K5,400,000.00 |
K1,000,000.00 |
|
Annual Licence fee |
K2,700,000.00 |
K600,000.00 |
|
Supervision fee |
0.02% of monthly average deposit for preceding 12-month period |
None |
BANKING AND FINANCIAL SERVICES (RESTRICTION ON KWACHA LENDING TO NON-RESIDENT) REGULATIONS
[Section 124]
Arrangement of Regulations
Regulation
1. Title
2. Interpretation
3. Restriction on lending to non-resident
4. Exemption
5. Request for information
6. Offences
7. Transitional provision
SI 44 of 2009.
These Regulations may be cited as the Banking and Financial Services (Restriction on Kwacha Lending to Non-Residents) Regulations.
In these Regulations, unless the context otherwise requires—
"financial service provider" has the meaning assigned to it in the Act;
"kwacha" means the Zambian Kwacha;
"non-resident" means a financial or non-financial institution, or a natural person, that is not domiciled in Zambia; and
"foreign exchange derivative transaction" means a financial transaction, or a similar transaction in whatever form or name, whose value is derived from price changes in one or more underlying assets.
3. Restriction on lending to non-residents
(1) A financial service provider shall not extend a loan or any other form of credit, or provide any source of kwacha funding to a non-resident for, a period of less than one year.
(2) Notwithstanding the generality of sub-regulation (1), a financial service provider shall not—
(a) provide a loan in kwacha to a non-resident for a maturity period of less than one year;
(b) provide any intraday overdraft to a non-resident;
(c) place any kwacha in the form of deposits, or other similar means, in a non-resident institution, of a period of less than one year:
Provided that where options are embedded in the deposits, the options may be exercised within a period of not less than one year;
(d) invest in kwacha denominated assets issued by a non-resident, except for those assets with residue maturity of at least one year at the time of investment;
(e) unless proof of underlying economic activity is shown, engage in foreign exchange derivative transactions, including but not limited to swaps and forward transactions, in which one of the currencies is the kwacha; or
(f) transfer any kwacha to a non-resident without any underlying economic activities in Zambia, except for settlement of non-resident accounts with local financial institutions related to domestic economic activities such as equity participation, securities transactions, foreign debt repayment in kwacha, import letters of credit in kwacha, goods and services purchased in Zambia, and non-residents living costs in Zambia.
Regulation 3 does not apply to following transactions—
(a) any cross currency swap forward or other derivative transaction in which the kwacha is not of the currencies; and
(b) investing in Zambia kwacha denominated assets issued by a non-resident with a specific activity.
The bank of Zambia may, for purposes of these Regulations, request a financial service provider to furnish details of any of its operations concerning a non-resident borrowing and lending in the domestic kwacha market.
(1) A person who—
(a) contravenes these Regulations;
(b) without reasonable excuse, fails or refuses to provide information, or produce any document, record or report required under these Regulations; or
(c) makes or causes to be made, an unauthorised entry, alteration or erasure in any document, record or report of financial service provider, or destroys, mutilates or conceals any document, record or report relating to a financial service provider;
commits an offence and is liable, upon conviction, to a fine not exceeding fifty thousand penalty units or to imprisonment for a term not exceeding two years, or to both.
(2) Where an offence under these Regulations is committed by a body corporate, every Director or senior officer of the body corporate shall be liable, upon conviction, as if the Director or senior officer personally committed the offence, unless the Director or senior officer proves to the satisfaction of the court that the act constituting the offence was done without the knowledge, consent or connivance of the Director or senior officer or that the Director or senior officer took reasonable steps to prevent the commission of the offence.
(1) A financial service provider shall, within 30 days from the publication of these Regulations, inform the Bank of Zambia of the financial transactions entered into before the commencement of these Regulations.
(2) The Bank of Zambia shall, upon receipt of any report made under sub-regulation (1), determine, on a case by case basis, whether or not to exempt the financial transactions from the application of these Regulations for purposes of completion of the transactions.
BANKING AND FINANCIAL SERVICES (BANK HOLIDAY) (DECLARATION) ORDER
[Sections 46 and 124]
Arrangement of Paragraphs
Paragraph
1. Title
2. Interpretation
3. Declaration of bank holiday
SI 74 of 2012.
This Order may be cited as the Banking and Financial Services (Bank Holiday) (Declaration) Order.
In this Order, unless the context otherwise requires—
"legal tender" means the notes or coins made by or issued under the authority of the Bank of Zambia; and
"re-denominated currency" means the legal tender that is effective from Tuesday, 1st January, 2013.
3. Declaration of bank holiday
(1) It is hereby declared that Monday, 31st December, 2012 shall be a bank holiday throughout the Republic.
(2) A financial service provider shall, on the date referred to in paragraph (1), complete the preparations for the launch of the re-denominated currency, which shall take place on Tuesday, 1st January, 2013.
(3) Except as otherwise provided in this Order, on the bank holiday, a financial service provider—
(a) shall be closed for business with the public; and
(b) shall not provide any banking or financial service, or automated teller machine services.
(4) Paragraph (3) does not apply to a branch of a financial service provider which operates at the airport or a border post.
BANKING AND FINANCIAL SERVICES (CLASSIFICATION AND PROVISIONING OF LOANS) (REVOCATION) ORDER
[Section 169]
Arrangement of Paragraphs
Paragraph
1. Title
2. Revocation of S.I. No. 142 of 1996
SI 31 of 2020.
This Order may be cited as the Banking and Financial Services (Classification and Provisioning of Loans) (Revocation) Order.
2. Revocation of S.I. No. 142 of 1996
The Banking and Financial Services (Classification and Provisioning of Loans) Regulations, 1996 are revoked{/mprestriction}