Regulatory Alerts2025-01-01
Bank of Zambia Circular No. 03/2025 on Draft Deposit Protection Directives
The Bank of Zambia has issued Draft Banking and Financial Services (Deposit Protection) Directives, 2025 to operationalize a Deposit Protection Fund that safeguards depositor funds and ensures financial system stability. All commercial banks and deposit-taking non-bank financial institutions must review the proposed directives using the provided template and submit their feedback by January 22, 2025. The directives establish comprehensive rules governing fund membership, premium calculations, coverage limits, reimbursement procedures, and regulatory oversight to guarantee immediate access to insured deposits upon institutional failure.
[Bank of Zambia Logo]
Bank of Zambia OFFICE OF THE DEPUTY GOVERNOR - OPERATIONS
BOZ/EXEC/DG/prs/bp
January 10, 2025
CB Circular No. : 03/2025
To : All Heads of Commercial Bank All Heads of Deposit Taking Non-Bank Financial Institution
REQUEST FOR COMMENTS ON THE DRAFT BANKING AND FINANCIAL SERVICES (DEPOSIT PROTECTION) DIRECTIVES, 2025
The Bank of Zambia is in the process of developing a legal framework to operationalize the Deposit Protection Fund, which aims to protect depositors’ funds in the event of a failure of a deposit-taking financial institution. This initiative will contribute to the stability of the financial system by providing assurance to depositors regarding immediate access to protected funds in such events.
In this regard, the Bank has developed the draft Banking and Financial Services (Deposit Protection) Directives, 2025, to operationalize the Fund. The Directives shall be issued pursuant to Section 132(5) and in exercise of the powers contained in Section 167 of the Banking and Financial Services Act, 2017.
The Bank, therefore, requests your respective institutions to review and provide comments on the draft directives in the format and manner outlined in the attached review template.
The comments should be submitted by January 22, 2025 to Mr. Vincent Suze: vsuze@boz.zm, Mr. Chimwemwe Munthali: cmunthali@boz.zm, Ms. Naomi Lungu: nlungu@boz.zm and a copy sent to your respective Desk Officers.
[Signature]
Francis Chipimo (PhD) DEPUTY GOVERNOR
cc Governor Director – Prudential Supervision
[Bank of Zambia Logo]
COMMENTS ON THE DRAFT BANKING AND FINANCIAL SERVICES (DEPOSIT PROTECTION) DIRECTIVES 2025
NAME OF INSTITUTION: _________________________________________________ *Please add more rows under each Directive if you have more comments
| Directive No. | Sub Directive | Current Provision | Proposed Amendment | Rationale for Proposed Amendment | Proposed action | Other Comment |
|---|---|---|---|---|---|---|
| PART I PRELIMINARY PROVISIONS | ||||||
| Directive 1: Short title | ||||||
| Directive 2: Interpretation | ||||||
| Directive 3: Application | ||||||
| PART II – THE DEPOSIT INSURANCE SCHEME | ||||||
| Directive 4: Establishment of the Scheme |
| Directive No. | Sub Directive | Current Provision | Proposed Amendment | Rationale for Proposed Amendment | Proposed action | Other Comment |
|---|---|---|---|---|---|---|
| Directive 5: Objectives of the Scheme | ||||||
| Directive 6: Membership of the Scheme | ||||||
| Directive 7: Cessation of Membership | ||||||
| Directive 8: Effect of Cessation | ||||||
| PART III THE DEPOSIT PROTECTION FUND | ||||||
| Directive 9: Establishment of the Fund | ||||||
| Directive 10: Sources of Funds | ||||||
| Directive 11: Investment of the Fund | ||||||
| Directive 12: Target Fund Size | ||||||
| Directive 13: Application of the Fund |
| Directive No. | Sub Directive | Current Provision | Proposed Amendment | Rationale for Proposed Amendment | Proposed action | Other Comment |
|---|---|---|---|---|---|---|
| Directive 14: Premiums to the Fund | ||||||
| 14.1 Initial Premium | ||||||
| 14.2 Annual Premium | ||||||
| 14.3 Special Premium | ||||||
| 14.4 Risk Based Premium | ||||||
| 14.5 Premium Default | ||||||
| 14.6 Non Transfer of Premium Cost | ||||||
| Directive 15: Prohibition of Premium Costs | ||||||
| Directive 16: Emergency Funding | ||||||
| Directive 17: Exclusions |
| Directive No. | Sub Directive | Current Provision | Proposed Amendment | Rationale for Proposed Amendment | Proposed action | Other Comment |
|---|---|---|---|---|---|---|
| PART IV COVERAGE AND DEPOSITOR REIMBURSEMENT | ||||||
| Directive 18: Coverage Limit | ||||||
| 18.1: Extent of Cover | ||||||
| 18.2: Coverage of Joint Accounts | ||||||
| 18.3: Coverage Rules for Trusts | ||||||
| 18.4: Coverage for Mergers or Amalgamations | ||||||
| 18.5: Limitation of Claim | ||||||
| Directive 19: Depositor Reimbursement | ||||||
| Directive 20: Currency Reimbursement | ||||||
| Directive 21: Subrogation | ||||||
| PART V FINANCIAL STATEMENTS OF THE FUND |
| Directive No. | Sub Directive | Current Provision | Proposed Amendment | Rationale for Proposed Amendment | Proposed action | Other Comment |
|---|---|---|---|---|---|---|
| Directive 22: Books of Accounts and Records | ||||||
| Directive 23: Audits | ||||||
| Directive 24: Annual Reports | ||||||
| PART VI GENERAL PROVISIONS | ||||||
| Directive 25: Public Awareness | ||||||
| Directive 26: Submission of Information | ||||||
| Directive 27: Appointment of Agent | ||||||
| Directive 28: Assignment | ||||||
| Directive 29: Penalty for Non-Compliance | ||||||
| Directive 30: Duties and Powers of the Bank |