Business

BoZ to relax rules for financial system entry

CYNTHIA MWALE, Chilubi Island
INDIVIDUALS who do not have the formal identification required to enter the financial system will now be permitted to do so through a law that will capture the underserved sectors of the economy.
This follows Bank of Zambia’s (BoZ) introduction of a simplified risk-based know-your-customer framework that will allow individuals who currently do not have the required formal identification to use other forms to enter the financial system.
BoZ governor Denny Kalyalya said the central bank attaches great importance to initiatives that seek to enhance the provisions of financial services to underserved sectors of the economy.
In a speech read for him by BoZ director of non-bank financial institutions supervision Visscher Bbuku, Dr Kalyalya said, “The bank will continue to support the market development by providing an enabling environment for the growth in the financial sector as a whole.”
This was at the commissioning of National Savings and Credit Bank Chilubi branch here over the weekend.
Dr Kalyalya said the other thrust of the initiatives that the BoZ is pursing to ensure the sector operates efficiently, effectively and in a sound manner is the implementation of a regulatory framework for agent banking to permit financial service providers to contract third parties to offer certain financial services on their behalf without having to put up “brick and mortar.”
“This model will, therefore, increase financial inclusion to the majority of the excluded Zambians at lower cost to both the FSP and the customer than would otherwise be,” he said.
Other initiatives include the implementation of the national financial education strategy to increase financial product and services awareness, as well as the development of legal framework for the establishment of a collateral registry for removable assets to increase access to finance, especially for small and medium-scale entrepreneurs (SMEs) and lead to better terms for loan term.
Currently, many SMEs are excluded from the formal credit market largely because they lack assets that can serve as collateral, although they may generally have a wide array of productive assets that could secure a loan but the legal framework prevents this.

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