Zambia: lending & credit regulation

Who regulates

• Bank of Zambia

  Primary supervisor of commercial banks and non-bank financial institutions; issues prudential rules, licensing, and consumer protection directives.

  ^{[1][2][3][4][5][6][5][7][8][9][10][11][12][13][14][15][16][17][18][19][20][21][22][23][24][25][26][27][28][29][30][31][32][33][34][35][36][37][38][39][40]}

Core laws & rules

• Banking and Financial Services Act (2017)

  The primary legislation governing the banking and financial services sector, under which the Bank of Zambia issues directives on classification, provisioning, and prudential standards.

  ^[14][30]

• Movable Property (Security Interest) Act (2016)

  Establishes a legal framework for creating, perfecting, and enforcing security interests in movable property to facilitate secured credit.

  ^[20]

• Banking and Financial Services (Cost of Borrowing) Regulations (1995)

  Mandates transparent disclosure of the true cost of borrowing, establishing standardized formulas for calculating the annual percentage rate.

  ^[40]

Licensing & registration

• Financial Service Provider License

  All commercial banks and non-bank financial institutions must be licensed by the Bank of Zambia to operate and extend credit.

  ^{[1][2][3][4][5][6][5][7][8][9][10][11][12][13][14][15][16][17][18][19][20][21][22][23][24][25][26][27][28][29][30][31][32][33][34][35][36][37][38][39][40]}

Restrictions & warnings

• Single-counterparty exposures are capped at 25% of regulatory capital, and aggregate large exposures are limited to 600% of regulatory capital.

  ^[2][35]

• Insider lending requires prior board approval, arm's length pricing, and robust credit risk mitigation, with strict aggregate lending limits.

  ^[3][37]

• Financial institutions must submit timely and accurate credit data to Credit Reference Agencies, with penalties for non-compliance.

  ^[7][26][30]

• Statutory interest rate caps were removed in 2015, replaced by requirements for transparent pricing, responsible lending, and mandatory disclosure of all borrowing costs.

  ^[21][22]

Direction of travel

• The BoZ is modernizing prudential rules, launching a Small Business Growth Initiative credit guarantee scheme, and promoting green lending through gazetted guidelines.

  ^[1][4][5]

• Regulators are unwinding pandemic-era prudential relief measures and enforcing standard classification and provisioning practices.

  ^[6]

Sources

1. Bank of Zambia Request for Comments on Draft Insider Lending and Large Exposures Rules 2025 · 2025-01-01
2. Banking and Financial Services (Large Exposures) Rules 2025 · 2025-01-01
3. Banking and Financial Services (Insider Lending) Rules 2025 · 2025-01-01
4. Circular No. 19/2025 – Small Business Growth Initiative Expression of Interest · 2025-01-01
5. Bank of Zambia Green Loans Guidelines 2023 Gazetted · 2023-01-01
6. Reversal of Prudential Relief Measures Introduced During the COVID-19 Pandemic · 2023-01-01
7. Bank of Zambia Circular No. 10/2021 on Submission of Updated Credit Data to Credit Reference Agency · 2021-01-01
8. Terms and Conditions for the Targeted Medium-Term Refinancing Facility · 2021-01-01
9. Bank of Zambia Prudential Relief Measures in View of COVID-19 · 2020-01-01
10. Bank of Zambia Banking and Financial Services (Classification and Provisioning of Loans) Directives, 2020 · 2020-01-01
11. Bank of Zambia Targeted Medium-Term Refinancing Facility Circular No. 19/2020 · 2020-01-01
12. Terms and Conditions for the Targeted Medium-Term Refinancing Facility · 2020-01-01
13. Bank of Zambia Targeted Medium-Term Refinancing Facility · 2020-01-01
14. Classification and Provisioning of Loans Directives 2020 · 2020-01-01
15. Bank of Zambia Targeted Medium-Term Refinancing Facility Circular No. 16 of 2020 · 2020-01-01
16. Microfinance Classification and Provisioning Directives, 2018 · 2018-01-01
17. Clarification on Implications of Customer Negative Listing on the Credit Reference Bureau · 2018-01-01
18. Implementation of IFRS 9 Financial Instruments by Financial Service Providers · 2017-01-01
19. Discrepancies in the Classification and Provisioning of Loans · 2016-01-01
20. Movable Property (Security Interest) Act 2016 · 2016-01-01
21. Removal of Interest Rate Caps and Consumer Protection Measures · 2015-01-01
22. Bank of Zambia Removes Interest Rate Caps and Introduces Consumer Protection Measures · 2015-01-01
23. NB Circular No. 1/2015 - Maximum Effective Annual Lending Interest Rates · 2015-01-01
24. Bank of Zambia Circular 17/2015 on the ZAMCRA Stakeholders Workshop · 2015-01-01
25. CB Circular No. 26/2015 Reporting Templates for the Credit Market Monitoring Programme · 2015-01-01
26. Guidance Note 1 of 2014 – Utilization of the Credit Reporting System · 2014-01-01
27. Maximum Effective Annual Lending Interest Rates · 2014-01-01
28. Directive on Cheques and Direct Debit Instructions Issued on Insufficiently Funded Accounts, 2010 · 2010-01-01
29. Bank of Zambia Risk Management Guidelines for Financial Service Providers · 2008-10-28
30. Bank of Zambia Directive on Credit Data Provision and Credit Reference Services Utilization (2008) · 2008-01-01
31. Bank of Zambia Circular 03/2006: Suspension of ZAMPIP Fund Disbursements · 2006-01-01
32. Bank of Zambia Circular 15/2002 on Support for Commercial Bank Lending to the Agriculture Sector · 2002-01-01
33. Bank of Zambia Circular on Classification and Provisioning of Loans Regulations · 1998-01-01
34. Bank of Zambia Circular 2/1998: Submission of Prudential Returns · 1998-01-01
35. Banking and Financial Services (Large Loan Exposures) Regulations, 1996 · 1996-01-01
36. Banking and Financial Services (Classification and Provisioning of Loans) Regulations, 1995 · 1996-01-01
37. Banking and Financial Services (Insider Lending) Regulations, 1996 · 1996-01-01
38. Bank of Zambia Circular 09/1996 on Insider Lending and Large Credit Exposures · 1996-01-01
39. Classification and Provisioning of Loans Regulations · 1996-01-01
40. Banking and Financial Services (Cost of Borrowing) Regulations, 1995 · 1995-01-01