The Bank is aware about concerns raised by the visually impaired citizens that they are facing challenges in identifying the new banknotes for a number of reasons. In this respect, the Bank will continue to sensitize members of the public on the new features on the banknotes in order to ease the identification. Please note that because the new banknotes were just released into circulation in November 2015, the problems being experienced are a normal learning curve experience which will be resolved as members of the public get used to the banknotes. Notwithstanding the foregoing, the Bank will continue to engage all the relevant stake holders to ensure that their concerns are promptly addressed. The Bank wishes to advise members of the public that there are no additional costs incurred in printing banknotes with features for the visually impaired. The printing of the banknotes with features for the visually impaired was a normal process following the expiry of the contract for the supply of banknotes for the period 2012 to 2014. Therefore, for the period 2015 to 2017, all banknotes ordered have features for the visually impaired. As these banknotes will continue circulating side by side, and also that there will be no wholesale withdrawal of the other banknotes until the banknotes are fully used in circulation,

We wish to advise that the process of issuing any currency into circulation is a systematic process that ensures that there are no disruptions in the day to day operations of the economy as the new currency integrates with circulating banknotes. In this regard, the Bank continues to issue new bank notes with the tactile feature for the visually impaired as well as those without this feature. The two types of banknotes are circulating side by side in circulation until such a time that the all the banknotes without the features for visually impaired are fully utilised and will only be removed after normal wear and tear of the banknotes. Please note that because the new banknotes with features for the visually impaired where only released into circulation in November 2015, it is not possible that all members of society could have seen these banknotes by now. However, it is expected that overtime, these banknotes will be available to all members of the public.

Bank Supervision refers to the oversight function that supervisory authorities carry out in order to fulfill their objectives of ensuring confidence in the financial system and maintaining financial system stability. The Bank of Zambia supervises banks through the Bank Supervision Department.

The Bank of Zambia has strengthened its legislation and its supervisory capacity to deal with banks that are identified as weak. It has been acknowledged worldwide that no amount of supervision can prevent the occurrence of bank failures. However, supervisory authorities can only minimize the risks of such occurrence and facilitate orderly exit.

One of Bank Supervision Departmentís objectives is to ensure the safety of customers deposits which contributes to financial system stability. The Bank of Zambia has put in place arrangements to ensure the safety of customer deposits. These arrangements are commonly known as the financial safety net and consist of the following: Prudential regulation and supervision which includes the licensing of banks to ensure that only fit and proper persons are allowed to own and manage banks and hence collect deposits from customers. It also includes the continuous operating in a safe and sound manner and hence ensures that deposits are safe. Deposit Protection Fund. The bank of Zambia together with the government is in the process of setting up a deposit protection scheme to insure deposits in banks up to a certain limit. Lender of Last Resort facility. This facility provides liquidity to financial institutions that are solvent but illiquid.

The reasons for past bank failures can be summarized as follows; Capital requirements for banks were low and, given the high inflationary environment prevailing prior to and after the bank reforms of 1992, it became evident that most banks were seriously under-capitalised and could not withstand volatility; Corporate governance structures and internal controls in banks were weak and management abuse was prevalent. Additionally, risk management structures in most banks were almost non-existent and risk management failures like unmitigated large loan exposures, insider borrowing and breaches in foreign exchange regulations were wide spread; The legal framework under which banks operated was weak, enforcement of the Banking and Financial Services Act was weak and a number of unsafe and unsound practices went unpunished; and, The BOZís supervisory capacity was weak and despite being mandated to regulate and supervise banks, the BOZ had no licensing powers

Before a company is registered as a bank it has to be incorporate as a company under the Companies Act. When a bank is closed and placed under liquidation, customer deposits in the bank are regarded as liabilities and the liquidation laws apply. Deposits are paid after the sale of assets and the realization of loans. In practice, Bank of Zambia often pays depositors an initial amount of K500.00 of the outstanding balance per account before the realization process commences in order to relieve depositors of any hardships.

The Bank of Zambia has in the past prosecuted Directors of failed banks. However, it is not automatic that when a bank fails then the Directors have to be prosecuted as this is determined by whether they have breached specific regulations or engaged

The Banking and Financial Services Act only allows persons who are deemed to be 'fit and proper' to hold shares in banks and to be directors and/or managers of banks. Where a Shareholder, Director or Manager of a bank engages in any criminal activities, their fitness and propriety will be compromised and hence Bank of Zambia will require them to cease from being shareholders, Directors or Managers of banks.

The minimum primary paid-up capital has been revised from K12 million to K104 million for locally owned banks K520 million for foreign owned banks effective from 30 January 2012.

The objectives of revising the minimum capital requirement are as follow; a. Fostering financial system stability since a financial system that is not adequately capitalized is vulnerable to instability and has the potential to impose both fiscal and economic costs to the government and the economy at large; b. To ensure a well-capitalized banking sector that is capable of providing adequate finance to support the increased economic activity in the country; c. To enhance the stability of the banking industry and therefore foster the confidence of the public in the Zambian financial system; d. To increase commercial banks' capacity to fund significant projects/ventures, such as mining, infrastructure development, the importation of oil without resorting to external sources of finance within the stipulated single obligor limits; e. To create opportunities for commercial banks to innovate and therefore be able to efficiently absorb the increased capital and achieve economies of scale; and f. To provide an opportunity to empower Zambians through the acquisition of shares in those banks that may seek to raise capital by listing on the local stock exchange. This may also have the additional benefit of diluting the shareholding structures of some commercial banks.

In line with the Government's free market policy, the determination of bank charges and interest rates is purely a business decision mainly based on each bank's cost structure and its associated risks. As far as interest rates are concerned the Banking and Financial Services Act (Cost of Borrowing Regulations, SI No.179 of 1995) prescribes the formula for determining the annual rate of interest. Further, banks are required to disclose to borrowers the cost of borrowing before a loan is made. Further the Bank of Zambia issued Circular No 05/2012 that introduced the Policy Rate. A policy rate is used to influence monetary and credit conditions in an economy. The policy rate will allow the BOZ to signal and increase or decrease in the price of credit in the market. In this regard all loans and advances will be made by commercial banks should be priced at a margin off the prevailing BOZ Policy Rate. As regards bank charges, interest rates and minimum account balances, the Bank of Zambia in 2004 took an initiative to start publishing, on a comparative basis, all charges levied by banks in the national press. The publication is done on a quarterly basis and the expectation is that this will assist bank customers compare charges and minimum balances across the industry and thus give them an opportunity to 'shop around' for cheaper services.

The schemes are examples of Money Circulation schemes which are prohibited and illegal in Zambia. The Banking and Financial Services Act (BFSA) defines a money circulation scheme as a scheme, plan arrangement, agreement or understanding between two or more persons which involves the pooling and distribution of funds by recruitment of subscribers, the continuation of whose existence and the realization of any of its benefits substantially depend on the incremental recruitment of subscribers from the public for an unspecified period.

A counterfeit note is an imitation or copy of legally produced banknotes made with the intention to defraud. It is produced without legal backing of the Government. It is not Legal Tender.

It is very important to compare a suspicious banknote with one you know is genuine and look for differences. Zambian banknotes are printed on unique paper with a distinct 'feel' factor which enables you to feel the numbers and words on the banknotes when you run your fingers over them.

Some of the main features to look out for include: i. The WATERMARK which is a Fish Eagle's head visible when the banknote is held against light ii. The HOLOGRAM - a shiny metallic stripe with colour shift element showing bird in flight, coat of arms, and denominational value iii. The PEAK PIXEL (K100 and K50) - fish eagle's head printed in raised ink with a rough feel when you run fingers over it. iv. The SECURITY THREAD which changes colours and shows text BOZ, denomination and birds in flight when tilted. The Thread appears as a continuous line when held against light. v. GOLD IRIDESCENT STRIPE which is a single line of birds flying in opposite directions on the front / back right hand side of the banknotes.

When presented with a suspected counterfeit note, carry out an inspection by looking out for the main features itemised above and pass it to another person for a second opinion. Once confirmed, report to the nearest Police station or any Bank of Zambia offices for further investigations.

If a counterfeit note is discovered, pass it on to Bank of Zambia, any Commercial bank or the nearest Police Station. Once the note is examined and is found to be genuine, it will be returned to you. But if it is found to be counterfeit, it will be confiscated.

The Bank of Zambia carries out sensitisation campaigns to educate the public on ways of identifying genuine banknotes and will from time to time use both the public and private media to spread the message on counterfeit notes in circulation.

Counterfeit notes falsely exchanged for goods and services result in the transfer of wealth from genuine agents to counterfeiters with the last person holding the note bearing the loss. They distort the economy by stealing wealth from genuine earners to the counterfeiters.

It is important for the public to ensure that banknotes are scrutinised carefully before accepting them for payment. Avoid transacting in unlit places. It is further recommended that high value transactions be settled using alternative payment methods such Electronic Funds Transfers (EFT), Point of Sale, Debit and Credit cards, RTGS transfers, e-money etc.