The Bank of Zambia has announced that maximum effective annual lending interest rate that commercial banks can charge any borrower will not exceed 18.25%.
This decisive action is aimed at stopping banks from charging excessive interest rates.
Central Bank Head of Public Relations Kanguya Mayondi says this cap is arrived at by adding a factor of 9 percent to the Policy Rate which currently stands at 9.25 percent.
In a statement released to Qfm news, Mr. Mayondi says the Bank of Zambia will periodically revise the factor applicable on the Policy Rate in response to changes in economic fundamentals and the Policy Rate itself.
He says the measure takes effect from the 2nd January, 2013 when the conditions will apply on new loans written.
Mr. Mayondi however states that existing loans will be allowed to run their course on the current terms unless refinanced.
He further states that a similar measure for providers of credit other than commercial banks will be announced in due course.