BoT puts online lending on spotlight

TANZANIA: BANK of Tanzania (BoT) has said it is working on a mechanism aimed at regulating the proliferation of online lending business.

The BoT’s Senior Principal Banking Examiner Deogratius Mnyamani said recently that there is mushrooming of unregistered online lending businesses operating illegally on various digital media platforms.

“We are currently working on regulations to ensure that online lending businesses operate legally and smoothly. “What we are doing now is to sensitise online lending service providers to comply with the law and register their business,” he said.

The Microfinance Act requires online lenders to register their businesses which will help to identify them and borrowers. He said the growth of technology has helped to ease the provision of financial services and reach those who are financially underserved.

“Technology should increase efficiency in providing online lending businesses, which is fundamental in enhancing financial inclusion,” he said.

He said borrowers who rush to take loans from online lenders are those whose credit history is not good. The formalisation of online lending business will help lenders to track down borrowers’ credit history to avoid defaulting and non-performing loans.

For borrowers, taking a loan from registered microfinance service providers will help them know all the conditions for lending put by the lenders.