2. (1) In this Act, unless the context otherwise requires— “advance” means— (a) any direct or indirect payment of money, a loan or an extension of credit made by a financial service provider to a person or common enterprise— (i) on the basis of an obligation of that person or common enterprise to repay the money, loan or extension of credit; or (ii) repayable from specific property pledged by, or on behalf of, that person or common enterprise; (b) credit risks arising from actual claims, potential claims and credit substitutes; or (c) a commitment to extend credit or acquire a debt security or other right to payment of a sum of money; “affiliate” in relation to a person, means a— (a) person that directly or indirectly controls, is controlled by, or is under common control with, that person; (b) person that has significant influence over that person; (c) person over whom that person has significant influence; (d) subsidiary or holding company of that person; or (e) person that is related to that person through ownership, control or management; “alternative financial services” means financial services or financial products based on ethical or religious principles, or channels that are outside conventional methods of conducting banking business or providing a financial service; “articles of association” has the meaning assigned to the words Cap. 388 in the Companies Act; “associated person” in relation to a financial service provider means— (a) a company in which a person is a manager or director; (b) each person that beneficially owns shares in the same company; Banking and Financial Services [No. 9 of 2026 305 (c) a third person that owns or exercises, or is capable of exercising, directly or indirectly, control over a company or person referred to under paragraph (a) or (b); (d) persons that are in a partnership; (e) persons that are both members of a voting trust or other arrangement relating to shares, except that this paragraph does not apply to a financial business where— (i) two or more persons are affiliated if the persons are companies that are controlled by the same person; and (ii) a company is the subsidiary of another company and if more than twenty-five percent of the issued voting shares of the company, other than qualifying directors’ shares, are owned directly or indirectly by the other company; or (f) a spouse, parent, child, brother, sister of a person, or of the person’s spouse’s parent, child, brother or sister; and the words “associate and association” shall be construed accordingly; “back-stop funding” means a financial arrangement where alternative sources of funding are provided by the Government in case the primary source of funding of a failed institution is unable to satisfy the current funding requirements; “bail-in” means a bail-in referred to under section 139 and 142; “bank” means a company licensed to conduct banking business in accordance with this Act; “Bank” means the Bank of Zambia established under the Cap. 1 Constitution; “bank or financial institution in resolution” means a bank or financial institution that is placed in resolution by the Bank under section 132; “banking business” means the business of receiving deposits, paying and collecting cheques, making of advances to 306 No. 9 of 2026 Banking and Financial Services customers, providing financial services and any other business as the Bank may determine for the purposes of this Act; “banking group” in relation to a financial service provider includes— (a) a holding company; (b) a bank, financial institution or financial business; (c) a subsidiary; and (d) an affiliate or associate within or outside the Republic; “banking licence” means a licence granted to conduct banking business under section 13; “banking service” means activities authorised by the Bank under a banking licence; “beneficial interest” means a right to interests or benefits that a person or entity may derive from a financial instrument or arrangement, regardless of whether the person is a legal owner; “beneficial owner” means a natural person who— (a) ultimately owns or controls a financial service provider; (b) ultimately owns or controls a person on whose behalf a transaction is being conducted by a financial service provider; (c) exercises ultimate effective control over a financial service provider; or (d) directly or indirectly, through a contract, arrangement, understanding, relationship or any other manner, ultimately owns, controls or has substantial interest in, or receives economic benefit from, a financial service provider; “board” means the governing body of a financial service provider; “body corporate” has the meaning assigned to the words in Cap. 388 the Companies Act; “borrower” means a person who, directly or indirectly, becomes indebted to a financial service provider, and includes a guarantee made for the repayment of an amount owed by another person; Banking and Financial Services [No. 9 of 2026 307 “branch” means premises, other than the principal administrative office, at which a financial service provider conducts business within or outside the Republic; “branchless banking service” means the provision of a banking service or financial service without a branch, and includes the use of an agent; “bridge institution” means an entity established by the Bank under section 141; “capital adequacy” means the minimum capital determined by the Bank in form of money or assets invested or available for investment sufficient for the sustainability of the financial service provider; “capital conservation buffer” means the capital that a bank or financial institution is required to hold, in addition to minimum capital requirements as determined, to be drawn- down when losses are incurred by a bank or financial institution during a period of stress; “capital distribution” means a payment made by a bank or financial institution from the capital and profit of the bank or financial institution, and includes— (a) dividends on common shares; (b) discretionary payments; (c) share repurchases; and (d) bonuses to employees; “chief executive officer” means a person appointed by a financial service provider who is responsible, under the direction of the board, for the management and conduct of the business of a financial service provider; “chief financial officer” means a person appointed by a financial service provider who is responsible for the financial management and maintenance of accounts and related records of a financial service provider; “close-out netting” means the operation of an agreement between two persons that— (a) may be commenced by notice given by one person to the other person on the occurrence of— (i) an event of default with respect to the other party; 308 No. 9 of 2026 Banking and Financial Services (ii) a termination event; or (iii) circumstances that arise automatically as specified in the agreement; and (b) has the following effect: (i) the termination, liquidation or acceleration of any present payment, future payment or delivery right or obligation arising under, or in connection with one or more qualified financial contracts to which a netting agreement applies; (ii) the calculation or estimation of a close-out value, market value, liquidation value or replacement value in respect of each right and obligation or group of rights and obligations terminated, liquidated or accelerated under subparagraph (i) and the conversion of each value into a single currency; and (iii) the determination of the net balance of the values calculated under subparagraph (ii), whether by operation of set-off or otherwise, giving rise to the obligation of one person to pay an amount equal to the net balance to the other person; “common enterprise” means— (a) two or more persons constituting a single risk arising from the direct, or indirect control, of one of those persons over the other persons; or (b) two or more persons having no relationship of control over one another, but who constitute a single risk as a result of being interconnected to the extent that if one of the persons experiences a financial problem, the other, or all of the, persons would in the opinion of the Bank encounter repayment difficulties; “common equity tier one capital” means a form of a capital instrument that has the capacity to absorb loss and includes the sum of— (a) paid-up common shares issued by a financial service provider; Banking and Financial Services [No. 9 of 2026 309 (b) share premium, resulting from the issue of common shares; (c) retained earnings; (d) accumulated comprehensive income and other disclosed reserves; (e) common shares issued by consolidated subsidiaries of the financial service provider and held by a third party that meets the criteria determined by the Bank, for inclusion in common equity tier one capital; (f) regulatory adjustments, applied in the calculation of common equity tier one capital, as determined by the Bank; and (g) any other capital instrument that enhances loss absorption capacity of a bank or financial institution or any changes to the capital instruments referred to under paragraphs (a) to (e) as may be determined by the Bank; “community banking” means the provision of a banking business or financial service to an individual, a micro, small and medium enterprise or household within a limited geographical area; “company” has the meaning assigned to the word in the Cap. 388 Companies Act; Act No. 3 of 2025 Act No. 3 of 2025 Cap. 417 “computer” has the meaning assigned to the word in the Cyber Security Act, 2025; “computer system” has the meaning assigned to the words in the Cyber Security Act, 2025; “concerted practice” has the meaning assigned to the words in the Competition and Consumer Protection Act; “consolidated supervision” means a group-wide approach by the Bank to supervise a financial service provider that belongs to a banking group taking into account the risks of that banking group; “consumer” means a person who accesses or uses, has accessed or used or intends to access or use, a financial service or financial product and is— 310 No. 9 of 2026 Banking and Financial Services (a) a natural person; (b) a group of natural persons, including a partnership, club, charity, trust or other unincorporated body; or (c) an incorporated body categorised as a micro, small and medium enterprise; “contingent convertible instrument” means a debt instrument that converts to equity on the occurrence of a specific trigger; “control” means a relationship where a person, alone or acting jointly with other persons— (a) owns more than twenty-five percent of the issued share capital of the financial service provider; (b) is entitled to cast a majority of the votes that may be cast at a general meeting of the financial service provider, or has the ability to control the casting of a majority of those votes, either directly or through a controlled entity of that person; (c) is able to appoint or to veto the appointment of a majority of the directors of the financial service provider; (d) is a holding company and the financial service provider is a subsidiary of that company; (e) in the case of a trust, has the ability to— (i) control the majority of the votes of the trustees; (ii) appoint the majority of the trustees; or (iii) appoint, or change, the majority of the beneficiaries of the trust; or (f) has the ability to significantly influence the management, policies, strategies, governance and financial affairs of the financial service provider in a manner comparable to a person who, in ordinary commercial practice, can exercise control as referred to under paragraph (a) to (e); “corporate restructuring transaction” means a merger, take- over, amalgamation, reconstruction or acquisition where an entity, directly, or indirectly, sells, disposes, transfers, Banking and Financial Services [No. 9 of 2026 311 acquires or establishes control over the whole or part of the business of a financial service provider or where two or more financial service providers or another entity agree to adopt arrangements for common ownership or control over the whole or part of the business of a financial service provider, and includes arrangements by an entity outside the Republic which affect a financial service provider within the Republic; “counter-cyclical capital buffer” means an amount of capital determined by the Bank to be maintained by a bank or financial institution where there is excessive build-up of credit or other factors that are likely to lead to systemic risk; “credit facility” includes an advance, financial guarantee or any other liability incurred by a person; “credit reference bureau” means a credit reporting agency licensed by the Bank in accordance with the Credit Reporting Act; “Credit Registry” has the meaning assigned to the words in the Credit Reporting Act; Cap. 411 Cap. 411 “credit report” has the meaning assigned to the words in the Cap. 411 Credit Reporting Act; “credit reporting system” means infrastructure used for a credit report under the Credit Reporting Act; Cap. 411 “customer” means a person who accesses or uses, has accessed or used or intends to access or use, a financial service or financial product; “deposit” means— (a) an amount of money received by a bank or financial institution in the ordinary course of business that— (i) (ii) the bank or financial institution may convert into assets at its own risk; or is repayable on demand or at a specified or unspecified date, or on terms agreed to, by, or on behalf of, the person making the payments; and (b) other obligations of a bank or financial institution as the Bank may determine; 312 No. 9 of 2026 Banking and Financial Services “Deputy Registrar” means a person appointed as Deputy Registrar under section 7; Cap. 388 “director” has the meaning assigned to the word in the Companies Act; “distressed institution” means a bank or financial institution whose liquidity or solvency is impaired or may become impaired and includes any of the following: (a) is under-capitalised or has liquidity shortfalls; (b) failure to meet regulatory requirements; (c) weak corporate governance, risk management or internal controls; (d) significant weaknesses in implementing measures relating to anti-money laundering or countering of terrorism financing and proliferation financing; or (e) rapid deterioration in asset quality or earnings; “eligible contract” means a financial agreement and includes a derivative contract, securities financing transaction, foreign exchange contract, collateral arrangement or any other financing contract determined by the Bank that qualifies for treatment in close-out netting under insolvency or resolution; “equity interest in a person” means, in relation to a— (a) company, shares issued by the company, which entitle the registered holder or bearer of the shares to the profits of the company; or (b) partnership, association or other body of persons acting jointly, any right to share in the profits of that partnership, association or other body of persons acting jointly; “equity interest in a property or undertaking” means an ownership interest, and includes a right to share in the profits of the operation or proceeds of disposal of the property or undertaking; “executive director” means, in relation to a financial service provider, a director who is involved in the day-to-day management of a financial service provider or that financial service provider’s affiliate, subsidiary or associate; Banking and Financial Services [No. 9 of 2026 313 “failed institution” means a bank or financial institution that is no longer viable or likely to no longer be viable and has no reasonable prospects, with reference to timing and other relevant circumstances, of returning to viability on grounds of being— (a) significantly under-capitalised; (b) insolvent or likely to be insolvent; or (c) unable to meet the bank or financial institution’s financial obligations as they fall due, whether or not the bank or financial institution is solvent; “financial business” means a person, as the Bank may determine, that conducts a financial service, except a financial service for the acceptance of deposits; “financial business licence” means a licence granted by the Bank under section 13; “financial inclusion” means access to, and informed usage of, a broad range of quality and affordable financial services and financial products that meet the needs of individuals and businesses in a fair, simple, responsible and sustainable manner; “financial institution” means a company, other than a bank or financial business, licensed to provide a financial service; “financial institution licence” means a licence granted by the Bank under section 13; “financial product” means a facility through which, or through the acquisition of which, a person makes a financial investment, manages financial risk or makes non-cash payments; “financial service” includes— (a) commercial or customer financing services; (b) brokering; (c) factoring, with or without recourse; (d) finance leasing; (e) financing of commercial transactions, including forfaiting; (f) issuance and administration of credit cards or debit cards; 314 No. 9 of 2026 Banking and Financial Services (g) issuance of guarantees, performance bonds or letters of credit, except guarantees or performance bonds issued by insurance companies; (h) issuance and administration of payment, credit or debit cards and, in collaboration with third party service providers determined by the Bank, operate payment systems, credit card and debit card systems; (i) provision of secured or unsecured advances or credit facilities; (j) dealing in securities; (k) payment of a cheque or any other demand order drawn or issued by a customer and payable from deposits held by that customer; (l) purchase and sale of foreign exchange; (m) acceptance of deposits; (n) issuance of building society and mutual society shares, with characteristics similar or identical to deposits; (o) micro-financing; (p) development financing; (q) housing finance; and (r) any other service that the Bank may designate, except a service relating to the underwriting, marketing or administration of contracts of insurance or re- insurance; “financial service provider” means a bank, financial institution or financial business; “financial system” has the meaning assigned to the words in the Bank of Zambia Act, 2022; “fit and proper person” means a person who is suitable for a specific responsibility assessed in relation to fit and proper requirements determined by the Bank; “fit and proper requirements” means the criteria determined by the Bank under section 51; “foreign company” has the meaning assigned to the words in Act No. 5 of 2022 Cap. 388 the Companies Act; Banking and Financial Services [No. 9 of 2026 315 “foreign financial service provider” means a financial service provider that is not incorporated in the Republic; “holding company” has the meaning assigned to the words in the Companies Act; Cap. 388 “home supervisor” in relation to a financial service provider, means a competent authority responsible for supervising a financial service provider or banking group on a consolidated basis; “independent non-executive director” means a non-executive director who is not under any undue influence that would impede that director’s exercise of objective judgement; “insider” means a— (a) senior officer, director or shareholder of a financial service provider or an associate of the senior officer, director or shareholder; (b) person who participates, or has the authority to participate, in functions relating to policy making of a financial service provider, whether or not that person is employed by the financial service provider; (c) financial service provider in which a person referred to under paragraph (a) or (b) owns shares, directly or indirectly, alone or with one or more other persons specified in those paragraphs; or (d) company in which a financial service provider owns shares; “insolvency” means a situation where a financial service provider has— (a) stopped paying debts in the ordinary course of business or is failing to pay debts when they fall due; (b) assets that are insufficient to meet liabilities; or (c) regulatory capital which is at zero or lower; “insured deposit” means a deposit insured up to a coverage limit determined by a relevant authority responsible for deposit insurance; 316 No. 9 of 2026 Banking and Financial Services “key fact statement” means a standardised disclosure document designed to provide borrowers with clear, concise and transparent information on the terms and conditions of a credit facility; Cap. 305 “legally disqualified” means the absence of legal capacity as provided for under section 4 of the Mental Health Act; Cap. 384 words in the Financial Intelligence Centre Act; “law enforcement agency” has the meaning assigned to the “licence” means a licence specified under section 9; “licensee” means a person issued with a licence under this Act; “linked financial service” means a product sold or service offered as a mandatory addition to the provision of a banking service or financial service; “loss bearing hierarchy” means the order in which creditors absorb losses in relation to a financial service provider placed in liquidation; “manager” means an officer of a financial service provider who is in a position to control, direct or influence decision making in a matter relating to a banking business or financial service provided by that financial service provider; “market conduct” means the manner by which a financial service provider— (a) designs and delivers the financial service provider’s financial products or financial services; and (b) manages the financial service provider’s relationships with its consumers and the public; “master agreement” means a contract that governs current and future transactions between two parties in a specific financial relationship or commercial relationship used in derivatives, securities lending, repurchase agreements and foreign exchange markets; “minimum capital requirements” means the minimum capital requirements determined by the Bank under section 59; “minimum paid-up capital” means the amount of money required to be paid-up for common shares issued by a financial service provider as determined by the Bank; Banking and Financial Services [No. 9 of 2026 317 “money circulation scheme” means a plan, arrangement, agreement or understanding, between two or more persons that involves the pooling and distribution of funds by recruitment of subscribers, and which, for its continuous existence and realisation of its benefits, substantially depends on the incremental recruitment of subscribers; “money laundering” has the meaning assigned to the words in the Prohibition and Prevention of Money Laundering Act; Cap. 99 “netting” means the off-setting of exposures between a financial service provider and another party into a single exposure in a settlement system; “new entity” means a financial service provider formed by a corporate restructuring transaction; “nominee shareholder” has the meaning assigned to the word “nominee” in the Companies Act; Cap. 388 “non-executive director” in relation to a financial service provider, means a director who is not involved in the day- to-day management of a financial service provider, or the management of that financial service provider’s affiliate, subsidiary or associate; “non-performing loan” means a credit facility in respect of which payment of the principal or interest is in arrears for more than ninety days or a longer period as the Bank may determine; “old entity” means a financial service provider existing prior to a corporate restructuring transaction; “open finance” means a financial innovation that facilitates the sharing of customer data, with the consent of the customer from one regulated entity to another regulated entity or a third party authorised by the Bank; “ordinary course of business” means the usual regular, and customary activities that a financial service provider undertakes as part of its normal operations consistent with past practices, industry norms and legal expectations; “Patents and Companies Registration Agency” means the Patents and Companies Registration Agency continued in existence under the Patents and Companies Registration Agency Act, 2020; Act No. 4 of 2020 318 No. 9 of 2026 Banking and Financial Services Act No. 5 of 2026 Act No. 3 of 2026 “payment system” has the meaning assigned to the words in the National Payment System Act, 2026; “port of entry” has the meaning assigned to the words in the Immigration Control Act, 2026; “primary capital” means the sum of the— (c) common equity tier one capital; and (d) additional tier one capital, as determined by the Bank; “principal administrative office” means the office where the overall administration of the affairs of a financial service provider is conducted, other than a branch; “professional advisor” means a third party appointed to render expert advice to, or perform specific functions for, a bank or financial institution; “proliferation financing” has the meaning assigned to the words Cap. 128 in the Anti-Terrorism and Non-Proliferation Act; “purchase and assumption transaction” means a resolution option in which a healthy bank or financial institution or a group of investors assume part, or all, of the obligations and purchase part, or all, of the assets of a bank or financial institution in resolution; “register” means the register of financial service providers kept and maintained by the Bank under section 27; “Registrar” means a person appointed as Registrar under section 7; “Registrar of Companies” means a person appointed as Registrar under the Patents and Companies Registration Agency Act, 2020; “Registrar of Lands and Deeds” means a person appointed as Registrar under the Lands and Deeds Registry Act; “regulatory capital” means the sum of the— (a) primary capital; and (b) secondary capital, as determined by the Bank; “regulatory statement” means rules, directives, guidelines, orders, circulars or bulletins issued by the Bank for the effective implementation of this Act; Act No. 4 of 2020 Cap. 185 Banking and Financial Services [No. 9 of 2026 319 “related party” in relation to a financial service provider means— (a) a person with significant shareholding, or is a beneficial owner, in a financial service provider or a financial service provider that has significant shareholding or has beneficial interest; (b) a director or senior officer of a financial service provider; (c) a director or senior officer of a corporate that controls the financial service provider; (d) a director or senior officer of a corporate which the financial service provider controls; (e) a person that can exert significant influence on the directors or senior management of the financial service provider; (f) an entity that is controlled by a person referred to under paragraphs (a) to (e); (g) a person who has, or class of persons who have, been designated by the Bank as associated persons as a result of past or present interest in, or relationship with, the financial service provider which may affect the judgement of a financial service provider in respect of a transaction; or (h) the spouse, parent, child, brother or sister of a person referred to under paragraphs (a) to (g) or of the person’s spouse’s parent, child, brother or sister; “repealed Acts” means the Banking and Financial Services Act, Cap. 387 and the Money-lenders Act, Cap. 398 repealed under section 214; “representative office” means an office in the Republic incorporated or registered by or representing a foreign financial service provider; “resolution” means the process by which the Bank manages the failure, or likely failure, of a bank or financial institution in a manner that safeguards— (a) financial stability; (b) critical functions performed by the bank or financial institution; or 320 No. 9 of 2026 Banking and Financial Services Act No. 5 of 2026 (c) the interests of depositors of the bank or financial institution. “resolution manager” means a person appointed as resolution manager under section 135; “resolution option” means a resolution option specified under section 139; “senior officer” means a chief executive officer, chief financial officer or manager of a financial service provider; “settlement system” has the meaning assigned to the words in the National Payment System Act, 2026; “shell bank” means an entity that does not have a physical presence in the country in which the entity is incorporated and licensed and which is unaffiliated with a regulated banking group that is subject to consolidated supervision; “significant shareholding” means a direct or indirect shareholding or beneficial interest of ten percent or more of the share capital of a financial service provider or a shareholding or any other beneficial interest that makes it possible to exercise significant influence, alone or jointly, over the financial service provider, and the words “significant shareholder” shall be construed accordingly; “significantly undercapitalised” in relation to a bank or financial institution means minimum capital of less than fifty percent of minimum capital requirements as the Bank may determine; “solo basis” means the financial position of a financial service provider as a stand-alone entity; Cap 388 “subsidiary” has the meaning assigned to the word in the Companies Act; “supervisory intensity” means the degree and frequency of oversight applied by the Bank to a financial service provider based on the financial service provider’s risk profile; “systemically important bank or financial institution” means a bank or financial institution designated by the Bank as a systemically important bank or financial institution under section 62; Banking and Financial Services [No. 9 of 2026 321 “terrorism financing” has the meaning assigned to the words in the Anti-Terrorism and Non-Proliferation Act; Cap. 128 “tribunal” means an ad hoc tribunal constituted under section 179; “trust” has the meaning assigned to the word in the Zambia Deposit Insurance Corporation Act, 2026; “trustee” has the meaning assigned to the word in the Zambia Deposit Insurance Corporation Act, 2026; Act No. 11 of 2026 Act No. 11 of 2026 “under-capitalised” in relation to a bank or financial institution means a financial service provider whose capital does not comply with capital adequacy requirements determined, in rules, by the Bank, but is not significantly undercapitalised; “unsafe and unsound practice” means— (a) conducting the affairs of a financial service provider in a manner that is detrimental to the stability of the financial sector or the interests of depositors and creditors, including- (i) accumulating a high volume of non- performing loans; (ii) making secured loans based on inadequate or inappropriate collateral; (iii) maintaining an inadequate level of reserves for loan losses; (iv) maintaining minimum capital below a determined level; (v) advancing loans to a borrower without regard to responsible finance as provided under this Act; (vi) maintaining inadequate liquidity; or (vii) weaknesses in corporate governance, risk management and internal controls; (b) conduct that is prejudicial to the interests of the financial service provider; (c) conduct in contravention of this Act or any other relevant written law; or (d) any other practice that the Bank may determine as unsafe and unsound practice; 322 No. 9 of 2026 Banking and Financial Services “virtual banking service or financial service” means the conduct of a banking business or provision of a financial service through an electronic platform and conducted or provided without physical interaction between the financial service provider and a customer; “voting shares” means a class of shares of a financial service provider that gives a shareholder the right to vote on a resolution at a meeting of the financial service provider; “vulnerable consumer” means a consumer, who, as a result of socio-demographic characteristics, behavioural characteristics, personal situations or market environment— (a) is at risk of experiencing negative outcomes in the market; (b) has limited ability to maximise the well-being of the consumer; (c) has difficulty in obtaining or assimilating information; (d) is impaired from choosing or accessing a suitable banking service or financial service; or (e) is susceptible to unfair marketing practices; “warehouse” means the temporary holding or accumulation of shares by an intermediary, nominee or related party, often with the intention of transferring control or ownership of the shares at a later stage; and “Zambia Institute of Chartered Accountants” means the Zambia Institute of Chartered Accountants established under the Accountants Act.
