Zambia’s new Banking and Financial Services Act ushers in sweeping financial sector reforms

The enactment of the Banking and Financial Services Act, 2026 marks a major transformation of Zambia’s financial regulatory framework. The new law significantly expands the regulatory authority of the Bank of Zambia (“BoZ”), modernises financial sector oversight, and repeals outdated legislation, including the Money-lenders Act - Chapter 398 of the Laws of Zambia.

At the heart of the new Act is the consolidation of financial sector regulation under the BoZ. The law provides that the central bank shall regulate and supervise financial service providers primarily to maintain the safety and soundness of financial institutions and preserve financial system stability. Importantly, the Act applies to financial service providers based on the principle of proportionality, allowing BoZ to tailor regulatory requirements according to the size, complexity, and risk profile of institutions.

One of the most consequential reforms is the repeal of both the previous Banking and Financial Services Act and the Money-lenders Act. The repeal of the Money-lenders Act is particularly significant because lenders and other non-traditional financial service providers will now operate within a unified regulatory framework supervised by BoZ. This effectively means that all institutions providing financial services as defined under the Act will now fall under the oversight of the central bank.

The Act broadly defines a financial institution as a company, other than a bank or financial business, licensed to provide a financial service. This widens the scope of regulation and strengthens oversight over entities that may previously have operated outside mainstream banking supervision. The legislation also introduces new categories of licences aimed at supporting financial inclusion and innovation. These include community banking licences, alternative financial service licences, and licences for virtual banking or virtual financial services. 

Community banking refers to the provision of banking or financial services to individuals, households, and micro, small, and medium enterprises within a limited geographical area. The model is expected to improve access to financial services, particularly in underserved communities.

The Act also recognises alternative financial services, defined as financial products or services based on ethical or religious principles or channels outside conventional banking methods. In addition, the law formally recognises 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.

Another key provision is the prohibition against conducting banking business or providing financial services without a licence issued under the Act. A person operating without a licence commits an offence and may face a fine of up to ZMW 1,200,000.00, imprisonment for up to thirty years, or both.

The Act further strengthens licensing requirements. Applicants must now submit certified incorporation documents together with policies on governance, risk management, internal controls, financial crimes management, and outsourcing. BoZ is also empowered to impose a moratorium on the issuance of licences where necessary to protect the public interest or preserve financial system stability.

Consumer protection is another 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 BoZ.

Overall, the Banking and Financial Services Act, 2026 represents a decisive shift toward a more comprehensive, centralised, 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. A licence issued under the repealed Acts shall continue to be valid until expiry, cancellation, or surrender as if the licence was issued under this Act.

Notwithstanding the repeal of the previous Banking and Financial Services Act and the Money-lenders Act, the Act contains important transitional provisions designed to ensure regulatory continuity and market stability. In particular, licences 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 means that entities previously operating under the Money-lenders Act will not be required to cease operations immediately upon commencement of the new law. Instead, such entities will continue operating under their existing licences while

transitioning into the new unified regulatory framework supervised by the Bank of Zambia. The transitional framework therefore seeks to facilitate a smooth migration into the new regime while preserving regulatory certainty, protecting consumers, and maintaining confidence in the financial sector.

Read prior Local Insights from Zambia: 

• Zambia's evolving landscape, key challenges, and future opportunities.

• Revisions to the Mining Framework in Zambia: Strengthening Regulation and Citizen Participation

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