BANK OF ZAMBIA

OFFICE OF THE DEPUTY GOVERNOR - OPERATIONS

April 08, 2008

CB Circular No: 04/2008

To : All Commercial Banks

CLASSIFICATION OF CORE LIQUID ASSETS

Reference is made to CB Circular 04/2006 dated 16 June 2006 in which the reduction in the Core Liquid Assets (CLA) ratio and the exclusion of Treasury bills with over 182 days original term to maturity from the calculation of core liquid assets were announced.

Kindly be advised that CB Circular 04/2006 has been withdrawn and is superseded by this circular. Whereas the CLA ratio remains unchanged at 9 percent of the deposit liabilities and bills payable, the composition of the Core Liquid Assets has been revised and shall include the following:

a) Zambian Notes and Coins; b) Current Account Balances; c) All Treasury bills (reported at face value); d) Term Deposits issued under BOZ Open Market Operations; e) Repurchase Agreement (Repo) placements under BOZ Open Market Operations; and f) Net Collateralized interbank loans.

With respect to item (f), “Net Collateralized Interbank Loans” shall be calculated as total interbank loans extended to other local banks less total interbank loans obtained from other local banks. Eligible loans for CLA purposes are only those collateralized by Treasury bills.

To take account of these changes, the weekly statistical return on Selected Assets and Liabilities, also referred to as Schedule 27 under the Bank Supervision Application (BSA), has been revised and a copy of the new template is hereto attached. The Daily Money Market return has also been redesigned in order to appropriately account for collateralized interbank loans and will be referred to as ZM-INTERBANK.

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Bank Square, Cairo Road P.O. Box 30080, Lusaka, Zambia Tel: +260 -211- 226844 Fax: +260 -211- 2370701 E-mail: dkalyaly@boz.zm http://www.boz.zm

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The Bank of Zambia wishes to emphasize that it is incumbent upon the commercial banks involved to ensure that information concerning interbank loans is correctly reported on the Daily Money Market return to facilitate appropriate accounting. With regard to holdings of Treasury bills, Term deposits, and Repo placements, each commercial bank is strongly advised to collect position statements from the Financial Markets department of the Bank of Zambia.

Under these new reporting requirements, all commercial banks shall provide explanatory schedules pertaining to changes in positions shown on their Selected Assets and Liabilities return. Specifically, the following six (6) schedules, copies of which are attached, will be required to be duly filled in and submitted together with the Selected Assets and Liabilities return:

• Schedule 27A-1: Changes in Kwacha Deposit Liabilities to the Public;
• Schedule 27A-2: Changes in Foreign Currency Deposit Liabilities to the Public;
• Schedule 27A-3: Changes in Kwacha Loans and Advances Outstanding;
• Schedule 27A-4: Changes in Foreign Currency Loans and Advances Outstanding;
• Schedule 27B-1: Balances of GRZ Kwacha Deposit Accounts; and
• Schedule 27B-2: Balances of GRZ Foreign Currency Deposit Accounts.

Soft copies of these schedules can be obtained from the CD accompanying this circular. For more details on how to fill in these schedules refer to the accompanying document on Guidelines for Completing the “Selected Assets and Liabilities” and the “Daily Money Market” Returns.

Please be informed that all the schedules will be required to be submitted in electronic form under the BSA. The weekly schedules should be received by noon of every Friday while the daily return should be submitted by 9:00 hours every business day.

Commercial banks are further requested to physically submit declaration forms every week bearing the signatures of their authorised personnel authenticating the accuracy of the reports.

The first submission date of these revised returns will be for the position as at Wednesday 23rd April, 2008.

Should you have any queries on this matter, please contact our Financial Markets department.

Denny H Kalyalya (Dr)
DEPUTY GOVERNOR – OPERATIONS

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ZM-SCH27
SCHEDULE 27

Institution:
Financial Year:
Start Date:
End Date:

BANK OF ZAMBIA

COMMERCIAL BANKS’ WEEKLY RETURN OF SELECTED ASSETS AND LIABILITIES

(For Financial Markets Department)

Position as on Wednesday	US $	Total in Kwacha
(I.) SELECTED ASSETS
1. Total Core Liquid Assets (a+b+c+d+e+f+g)
(a) Zambia Notes and Coins
(b) Current Account Balances at BOZ
(c) Treasury Bill Holdings at face value
(d) OMO Term Deposits
(e) OMO Repo Placements
(f) Collateralised Interbank Loans Made
(g) Collateralised Interbank Loans Received
2. Kwacha Statutory Reserve Account Balances at BOZ
3. Foreign Currency (FCY) Statutory Reserve Account Balances at BOZ (US $)
4. Total Loans and Advances (4(a) + 4(c))
(a) Kwacha Loans and Advances Outstanding
(b) Foreign Currency Loans and Advances Outstanding (US $)
(c) Foreign Currency Loans and Advances Outstanding in Kwacha (4(b)*BOZ mid-rate)
5. New Lending to Agriculture (5(a) + 5(c))
(a) New Kwacha Loans to Agriculture
(b) New Foreign Currency Loans to Agriculture (US $)
(c) New Foreign Currency Loans to Agriculture in Kwacha (5(b)*BOZ mid-rate)
(II.) SELECTED LIABILITIES
6. Total Liabilities to the Public (6.1 + 6.2)
6.1 Kwacha Deposit Liabilities to the Public (6.1(a) + 6.1(b))
(a) Kwacha Deposit Liabilities to the Public
(b) Bills Payable
6.2 Foreign Currency Deposit Liabilities to the Public in Kwacha (6.2(a)* BOZ mid-rate)
(a) Foreign Currency Deposit Liabilities to the Public in US $
7. Kwacha Deposit Liabilities to the Public less New Agricultural Lending in Kwacha (6.1(a) - 5(a))
8. Foreign Currency Deposit Liabilities to the Public less New Agricultural Lending in Foreign Currency (6.2(a) - 5(b))
9. Total Kwacha Government Deposits (9(a) + 9(c))
(a) Kwacha Deposits
(b) Foreign Currency Deposits (US $)
(c) Foreign Currency Deposits in Kwacha (9(b)*BOZ mid-rate)
(III.) COMPLIANCE RATIOS
Core Liquid Asset Compliance
10. Core Liquid Asset Ratio (%) (1 / 6.1)		0.00%
11. Minimum Required Core Liquid Assets (9% of 6.1)		-
12. Excess/shortfall in Core Liquid Assets (1 - 11)		-
Kwacha Statutory Reserves Compliance
13. Kwacha Statutory Reserve Ratio (%) (2 / 7)		0.00%
14. Minimum Kwacha Statutory Reserves (8% of 7)		-
15. Excess/shortfall in Kwacha Statutory Reserves (2 - 14)		-
Foreign Currency Statutory Reserves Compliance
16. FCY (US $) Statutory Reserve Ratio (%) (3 / 8)		0.00%
17. Minimum FCY Statutory Reserves (8% of 8)		-
18. Excess/shortfall in FCY Statutory Reserves(US $) (3 - 17)		0
Reporting BOZ mid-rate (ZMK/US $)

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ZM-SCH27A1
ATTACHMENT A PART 1: CHANGES IN KWACHA DEPOSIT LIABILITIES TO THE PUBLIC (ZMK)

Institution:
Financial Year:
Start Date:
End Date:

Weekending Wednesday
<Enter Date Here>

ACCOUNT HOLDER	SECTOR	ACTIVITY	AMOUNT