The Bank of Zambia on 25 August in a press release announced the closure and compulsory liquidation of GENESIS FINANCE LIMITED, COMMERCIAL LEASING ZAMBIA LIMITED and CETZAM FINANCIAL SERVICES following a Board Resolution passed on 2nd August 2016. This is with immediate effect, in accordance with Section 101 of the Banking and Financial Services Act, Chapter 387 of the Laws of Zambia.
The central bank advised that a liquidation manager will be appointed to be in charge of the liquidation process. During the time of the liquidation, the business operations of these non bank finance institutions will be restricted to realization of assets and discharging of obligations of the company.
Further, in accordance with Section 101 (3) of the Banking and Financial Services Act, directors, shareholders, depositors and creditors of Genesis Finance Limited have been given thirty (30) days from the date of notice to file an objection to the liquidation or appeal to the Court.
These non bank finance institutions had their licenses suspended following failure for shareholders to capitalize opeartions and other corporate governance flaws earlier in the year. Former CEO of CETZAM Kelvin Milambo had cited the introduction of the maximum effective lending cap on interest rates at 40% – 45% without giving these institutions room to adapt, as the genesis of their downfalls. This effectively constricted the institutions profitability margins. This collapse comes at a time when Africa’s second largest producer of copper, Zambia grapples with high interest rates. The non performing loan books of these entities rose steeply owing to the fact that most clientele defaulted on personal loans.
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