PUBLIC NOTICE PUBLIC WORKERS HIGH LOAN DELINQUENCIES The @BankofZambia has observed, with concern, the elevated ratio of non-performing loans associated with public workers. This highlights the growing risks associated with payroll based lending, particularly arising from practices that deliberately or calculatedly circumvent prescribed debt service ratio (DSR) and affordability requirements of lending institutions. Recent financial stability assessments have revealed increasing incidences of some public workers obtaining credit not based on the payroll (off-payroll credit). Such credit is often beyond permissible limits, often through misrepresentation, non disclosure of existing obligations, and multiple borrowing across institutions. In some cases, lending institutions have also been found to have weak or non compliant credit underwriting practices, including inconsistent use of the Credit Reference Bureau (CRB), or disregard of data from the Bureau altogether. The Bank wishes to remind regulated lending institutions, employees and payroll administrators, that compliance with DSR and affordability standards, and consistent use of CRB is mandatory. This is on the basis that these tools form part of a critical safeguard for responsible lending, consumer protection, prudent credit underwriting, and financial stability. All regulated lending institutions are, therefore, hereby directed to strictly adhere to debt service ratio limits and adopt responsible lending practices. Payroll administrators should strengthen internal payroll controls and recovery mechanisms, and take appropriate remedial or disciplinary measures where abuse of payroll based deduction arrangements is identified The Bank of Zambia shall continue to monitor compliance with the Banking and Financial Services Act (Provision of Credit Data and Utilisation of Credit Reference Services) Directive of 2020 by regulated entities, off payroll and payroll based lending practices and will take all necessary measures to ensure compliance with applicable laws and prudential standards. OFFICIAL SNOTICE BELOW