Regulatory Alerts2001-01-01
Bank of Zambia Circular 07/2001: Foreign Exchange Placements and Deposits
The Bank of Zambia mandates strict limits on foreign exchange placements and deposits for all commercial banks and financial institutions, capping related-party exposures at 40 percent and other counterparty exposures at 60 percent of total foreign exchange holdings. The circular restricts foreign currency demand deposits to 25 percent of total foreign currency deposits, prohibits placements in non-rated or offshore secrecy jurisdictions beyond specified thresholds, and requires prior regulatory approval for new correspondent relationships. Institutions must submit weekly reporting schedules and face daily penalty charges of 10 percent for placement violations and 5 percent for demand deposit breaches, with a five-day grace period to clear excess exposures.