Regulatory Alerts2006-01-01
Penalty on Late Settlement of Foreign Exchange Deals
The Bank of Zambia has immediately revised the penalty calculation basis for delayed foreign exchange settlements across all commercial banks. The updated framework replaces the previous interest-based method, which referenced the Bank for International Settlements USD 2 Day Notice Account, with a rate derived from London interbank benchmarks. Commercial banks must now apply this revised penalty structure to accurately assess and collect fees on late-settled foreign exchange deals.
# BANK OF Z Z
## OFFICE OF THE DEPUTY GO
### August 24, 2006
### CB Circular No: 07/2006
#### TO: All Commercial Banks
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## PENalties on Late Settlement of Foreign Exchange Deals
Notice is hereby given that with immediate effect, the Bank of Zambia has revised the basis for computing the penalty on delayed settlement of foreign exchange deals entered into with commercial bank of Zambia.
Currently, the Bank of Zambia penalty is based on the interest that would have been earned had the funds been received on the settlement date and deposited at the Bank for International Settlement in the USD 2 Day Notice Account. Commercial banks, however, compute their penalty rate by using the Londoner1000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000B
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