Regulatory Alerts2014-01-01
Maximum Effective Annual Lending Interest Rates
The Bank of Zambia has adjusted the calculation factor for maximum effective annual lending interest rates from 1.0 to 1.78, effective immediately. This adjustment caps the maximum lending rate at 28.0 percent, calculated using a 9.0 percent margin and the May 2014 policy rate of 12.0 percent. The central bank will continuously monitor financial market developments and revise the applicable factor or margin in response to shifting economic fundamentals.
BANK Of ZAMBIA OFFICE OF THE DEPUTY GOVERNOR - ADMINISTRATION 16 June, 2014 CB Circular No: 17/2014 To All Heads of Commercial Banks MAXIMUM EFFECTIVE ANNUAL LENDING INTEREST RATES Further to CB Circular No. 25/2012, the Bank of Zambia wishes to advise all commercial banks that with immediate effect, the 'Factor' to be used in the computation of the maximum effective annual lending interest rate has been adjusted from 1.0 to 1.78. Therefore, based on this factor and the May 2014 Policy Rate of 12.0%, the maximum effective annual lending interest rate shall not exceed 28.0% computed as follows: Factor Margin Policy Rate Maximum Rate (A) (B) (C) ((A x B) + C) 1.78 9.0 12.0% 28.0% Further, the Bank of Zambia will continue to monitor the developments in the financial markets and will whenever necessary revise the factor applicable and/or the margin in response to changes in economic fundamentals or market conditions. Dr~~bula DEPUTY GOVERNOR - ADMINISTRATION Cc Governor Bank Square, Cairo Road, P.O. Box 30080, Lusaka, Zambia. Tel: +260-211-229930 Fax: +260-211-222808 E-mail: tkmabula@boz.zm. Web: http://www.boz.zm