Causes of the collapse of Banks in Zambia: A legal perspective

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Mushota, Mwaba
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For a very long time, the history of banks in Zambia was that of firm, stable and reliable institutions. The events of the past ten years have however sadly changed this picture. Depositors no longer have the confidence and guaranteed security over their investments. The reputation and image of banks has been ostensibly marred.In an attempt to arrest the mischief, government introduced new legal measures to strengthen the control and administration of banks. The effect of these measures are yet to be seen.The Banking and Financial Services Act of 1994 was expected to reinvigorate and rejuvenate banks into reputable repositories they used to be. The avalanche has unfortunately continued to sweep banks into oblivion.It is regrettable however that the literature on this subject still remains scanty and in most instances a guarded secret.The task this essay aims to accomplish is therefore magnanimous and of obvious relevance to any curious observer who has witnessed the sudden perplexing rise and fall of banks in Zambia. The essay will examine the various laws related to banks and how they have been applied to save the banks from collapse. The essay will also analyse internal administrative procedures and controls in the banks for possible lapses.Not many people have undertaken to expound on this subject up to this point in time, despite the effects of bank closures being still vivid in our memory.It is my task however to relive in this essay the gloomy experiences of banks closure in Zambia and examine the causes for a possible solution.We shall examine the role of Bank of Zambia as lender of last resort and as the supervising institution of all banks. We shall equally examine the law relating to banks and where possible make necessary recommendations.The essay shall conclude with recommendations towards the end.
Banks and Banking-Zambia , Consumer Credit-Zambia