The Bank of Zambia, also referred to as BoZ, is the central bank of the Republic of Zambia. Its main functions are to ensure appropriate formulation and implementation of monetary and supervisory policies, provide banking services to the Government and commercial banks and act as settlement agent, license, regulate and supervise banks and other financial service providers under its jurisdiction, and ensure a safe and sound financial system.
No. The Bank of Zambia does not provide banking services to members of the public. These services are limited to the Government and commercial banks.
A counterfeit note is an imitation or copy of legally produced banknotes. It is made with the intention to defraud the recipient. Read more on counterfeit notes, how to detect them and what to do if you come in contact with one.
All genuine banknotes have security features that can easily be verified by looking, touching and tilting. Security features were recently enhanced on all denominations in order to continue effectively safeguarding the integrity of the Kwacha banknotes. You can learn more about the bankotes here and the key security features here.
The Bank of Zambia withdraws soiled and mutilated banknotes from circulation and replaces them with fit notes. You can submit your unfit notes to either any commercial bank or directly to the Bank of Zambia. The returned notes will be examined before consideration of payment, if any.
All banknotes have tactile marks on both edges of the note. These marks have enhanced tactility, or the feel effect, to enable visually impaired people verify whether the note is genuine or not. Further, the number of tactile marks differ according to denomination e.g. K2 has two marks on both edges while K100 has seven marks. This allows visually impaired people to tell the denominations apart.
Cryptocurrencies are not legal tender in Zambia. Section 30 of the BoZ Act vests the right to issue notes and coins exclusively in the Bank of Zambia and to date, the Bank has not issued any form of cryptocurrency. BoZ does not oversee, supervise nor regulate the cryptocurrency landscape and all activities are therefore performed at owner's risk.
Government securities are debt instruments issued by the Government of Zambia through the Bank of Zambia. By issuing these instruments, the Government is borrowing money from the buyers of the debt instruments. These debt instruments are in the form of Treasury Bills and Government Bonds.
There are no restrictions for eligibility. Business firms, institutions, foreign entities and individuals are all eligible to purchase Government securities at the Bank of Zambia. The only condition is that every entity must have a local bank account. You can read more about Government securities here.
The minimum primary paid-up capital has been revised from K12 million to K104 million for locally owned banks and K520 million for foreign owned banks. The revision came into effect on 30th January, 2012.
The minimum capital requirement was revised for the following reasons: i. To foster financial system stability. A financial system that is not adequately capitalised is vulnerable to instability and has the potential to impose both fiscal and economic costs to the government and the economy at large; ii. To ensure a well-capitalised banking sector that is capable of providing adequate finance to support the increased economic activity in the country; iii. To enhance the stability of the banking industry and foster the confidence of the public in the Zambian financial system; iv. To increase commercial banks' capacity to fund significant projects/ventures such as mining, infrastructure development,importation of oil etc, without resorting to external sources of finance within the stipulated single obligor limits; and v. To provide an opportunity to empower Zambians through the acquisition of shares in those banks that may seek to raise capital by listing on the local securities exchange. This may also have the additional benefit of diluting the shareholding structures of some commercial banks.
Banks base their interest rates on their cost of funds and market conditions, among other things. As a consumer protection measure, the Bank of Zambia requires financial service providers to publish their interest rates and charges and to display these at all their branches in order to enhance transparency. The expectation is that competition among banks will allow customers to shop around for rates and conditions that are suitable to them.
The majority of loans granted by banks have variable interest rate, meaning that each time the bank adjusts interest rates, the interest charged on a loan is adjusted. When this happens, the bank can either increase the monthly loan repayment to cater for increased interest or extend the loan tenure but maintain the customerís monthly repayment amount. Most banks do the latter so as not to overburden their clients with increased monthly repayments. However,a bank should inform the customer when this happens.
The Bank of Zambia issued a Directive on the Prohibition of Unwarranted Charges and Fees to all financial service providers. The Directive, which can be accessed here, came into effect on 4th September, 2018. If you are levied an unwarranted charge or fee, you should bring the matter to the attention of your financial service provider. In a case where the complaint is not resolved by your financial service provider, you can bring the matter to the attention of the Bank of Zambia. See full List of Unwarranted Charges and Fees covered under the Directive and accompanying explanatory notes.
A licensed financial service provider is, by law, required to display the original or certified copy of their licence. The licence must have the following details: i. The name of the financial service provider ii. Address of the principal place of operation iii. The logo and identifying marks of the Bank of Zambia iv. The licence number and type of licence e.g. microfinance, financial institution etc v. The signature of the Registrar of Banks, Financial Institutions and Financial Businesses
A money circulation scheme is a plan, arrangement or understanding between two or more persons which involves the pooling and distribution of funds by recruitment of subscribers. The continuation of its existence and the realisation of any of its benefits substantially depend on the incremental recruitment of subscribers from the public for an unspecified period.
A Ponzi Scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organisation running the operation. The scheme usually entices new investors by offering higher returns than other investments in the form of short-term returns that are either abnormally high or unusually consistent. Perpetuation of the high returns requires an ever-increasing flow of money from new investors to keep the scheme going.
Money Circulation and Ponzi Schemes are prohibited under the Banking and Financial Services Act. The viability or continued existence of the schemes is dependent on the incremental recruitment of subscribers from the public. When new subscribers cannot be found, the schemes fail.
The requirements for setting up a Non-Bank Financial Institution in Zambia can be accessed here.