Zambia Enacts New Banking and Financial Services Act
On May 19, 2026, Zambia enacted the Banking and Financial Services Act, 2026, marking a significant transformation of the country's financial regulatory framework. The new law expands the regulatory authority of the Bank of Zambia (BoZ), modernizes financial sector oversight, and repeals outdated legislation, including the Money-lenders Act.
The Act consolidates financial sector regulation under the BoZ, granting the central bank the mandate to regulate and supervise financial service providers to maintain the safety and soundness of financial institutions and preserve financial system stability. The legislation applies the principle of proportionality, allowing the BoZ to tailor regulatory requirements according to the size, complexity, and risk profile of institutions.
A key reform is the repeal of both the previous Banking and Financial Services Act and the Money-lenders Act. This change brings all institutions providing financial services under the unified regulatory framework supervised by the BoZ, effectively eliminating the separate category of money lenders.
The Act introduces new categories of licenses aimed at supporting financial inclusion and innovation, including community banking licenses, alternative financial service licenses, and licenses for virtual banking or virtual financial services. Community banking focuses on providing services to individuals, households, and micro, small, and medium enterprises within limited geographical areas, improving access to financial services in underserved communities.
Alternative financial services are defined as financial products or services based on ethical or religious principles or channels outside conventional banking methods. The law also formally recognizes virtual banking and financial services conducted through electronic platforms without physical interaction between institutions and customers, reflecting the growing role of digital finance and fintech innovation in Zambia.
The Act prohibits conducting banking business or providing financial services without a license issued under the Act. Operating without a license constitutes an offense, punishable by a fine of up to ZMW 1,200,000.00, imprisonment for up to thirty years, or both.
Licensing requirements have been strengthened, with applicants now required to submit certified incorporation documents along with policies on governance, risk management, internal controls, financial crimes management, and outsourcing. The BoZ is also empowered to impose a moratorium on the issuance of licenses where necessary to protect the public interest or preserve financial system stability.
Consumer protection is a major pillar of the legislation. Financial service providers are prohibited from harassing or abusing consumers during debt collection or using deceptive and misleading practices. Additionally, institutions seeking to introduce or increase consumer charges must first obtain approval from the BoZ.
The Banking and Financial Services Act, 2026, represents a decisive shift toward a more comprehensive, centralized, and technology-responsive financial regulatory framework. By bringing all financial service providers under BoZ supervision and repealing the Money-lenders Act, the legislation positions Zambia's financial sector for stronger oversight, enhanced consumer protection, and greater financial stability.
Transitional provisions ensure regulatory continuity and market stability. Licenses issued under the repealed legislation will remain valid until their expiry, cancellation, or surrender and will be treated as though they were issued under the new Act. This allows entities previously operating under the Money-lenders Act to continue operations while transitioning into the new unified regulatory framework supervised by the BoZ.
