Regulatory Alerts2015-01-01
NB Circular No. 1/2015 - Maximum Effective Annual Lending Interest Rates
The Bank of Zambia has revised the maximum effective annual lending interest rates for Non-Bank Financial Institutions following a policy rate increase to 12.50 percent. Enterprise-lending microfinance institutions are now capped at 56.40 percent, while all other NBFIs face a maximum rate of 40.28 percent. These updated caps are calculated using a fixed margin applied to commercial bank lending rates and will automatically adjust as the central bank announces monthly policy rate changes.
[Logo: Bank Of Zambia]
OFFICE OF SENIOR DIRECTOR – MONETARY POLICY
Tel: 260-1-232694 Fax: 260-1-237070
13 January 2015
NB Circular No: 01/2015
To: All Non-banks Financial Institutions
MAXIMUM EFFECTIVE ANNUAL LENDING INTEREST RATES
Further to NB Circular No. 05/2012, the Bank of Zambia wishes to advise all Non-Bank Financial Institutions (NBFIs) that following the increase in the Bank of Zambia Policy Rate to 12.50%, the maximum lending rates for NBFIs have consequently also revised as demonstrated in Table below.
Computation of the Maximum Lending Rates for Non-Bank Financial Institutions
| | Maximum Effective Lending Rate Commercial Banks | Maximum Effective Lending Rate for NBFIs | | :--- | :---: | :---: | :---: | :---: | :---: | | | Factor A | Margin B | Policy Rate C | Maximum Rate (A x B)+C = (D) | NBFIs Factor E | Maximum Rate D x E | | Enterprise-Lending Microfinance Institutions | 1 | 12% | 12.50% | 24.5% | 2.302 | 56.40% | | All other NBFIs | 1 | 12% | 12.50% | 24.5% | 1.644 | 40.28% |
Please be advised that the maximum effective annual lending rates for NBFIs are linked to the maximum effective annual lending rate for commercial banks which changes from time to time depending on the movement in the Policy Rate which the Bank of Zambia announces every month.
[Signature]
PETER BANDA SENIOR DIRECTOR – MONETARY POLICY
cc: Governor Deputy Governor – Administration Senior Director – Supervisory Policy
Bank Square, Cairo Road P.O. Box 30080, Lusaka, Zambia Tel: 260-211-228901/5, 228888 Fax:260-211-221764 E-mail: pr@boz.zm, Web: http://www.boz.zm