Regulatory Alerts1998-01-01
Bank of Zambia Circular on Classification and Provisioning of Loans Regulations
The Bank of Zambia issued this circular to grant interim relief from standard provisioning requirements for well-secured loans undergoing recovery that would otherwise trigger mandatory provisions under the 1996 Regulations. Financial institutions may now recognize collateral values at up to 50 percent for Category 1 assets or 20 percent for Category 2 assets when principal repayments are over three months in arrears, while prohibiting unprovided balances for arrears exceeding one year. These exemptions exclude second mortgages, life insurance policies, and unsupported guarantees, and all qualifying loans must continue to be reported monthly according to their underlying classification status.
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