BANK of Zambia (BoZ) has taken over three micro financial institutions (MFIs) after determining that they are insolvent.
The affected MFIs are Cetzam Financial Services plc, Genesis Finance Limited, and Commercial Leasing Zambia Limited.
This is contained in a statement issued by BoZ head of communications Kanguya Mayondi in Lusaka yesterday.
“Notice is hereby given that pursuant to section 81 of the Banking and Financial Services Act, Chapter 387 of the Laws of Zambia, the Bank of Zambia has taken possession of Cetzam Financial Services plc, Genesis Finance Limited and Commercial Leasing Zambia Limited with immediate effect,” Mr Mayondi said.
He said the bank has determined that the three firms are capital insolvent and that the shareholders have failed to recapitalise the institutions, could not propose a recapitalisation plan acceptable to, and enter into an agreement with BoZ.
Mr Mayondi also said the board of directors of the MFIs have been unable to resolve the deteriorating financial performance and condition of the institutions, leaving the central bank with no option but to exercise its authority under the law to safeguard the interests of the public, and provide for their orderly exit from the financial system.
The central bank is empowered, under the law to take possession of a financial service provider, where such a financial service provider refuses to comply with an order or directive of the BoZ.
The bank can also take over a firm if it refuses to permit an inspection to be made as provided by law or obstructs an inspection.
“The bank can take over if in its opinion, an inspection instituted under this Act shows that the financial service provider concerned conducts its business in breach of any written law or engages in a course of conduct that is unsafe and unsound,” Mr Mayondi said.
He said the bank is also empowered to take over if, for any reason, the financial service provider is unable, or is likely to become unable, to continue its operations in the ordinary course of its business; the financial service provider’s capital is less than the prescribed minimum; or the financial service provider is insolvent. Source: Daily Mail