Regulatory Alerts2018-01-01
Microfinance Classification and Provisioning Directives, 2018
The Bank of Zambia issued the Microfinance Classification and Provisioning Directives, 2018 to standardize risk assessment and capital adequacy for all regulated microfinance institutions. The directives mandate the classification of credit facilities into five risk categories based on days past due, requiring non-performing loans exceeding thirty days to be placed on a non-accrual basis with interest reversed to suspense. Furthermore, institutions must maintain a minimum 1 percent general provision on performing balances and establish tiered specific provisions ranging from 25 percent for substandard loans to 100 percent for loss assets, which must be written off within six months.
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