BANK of Tanzania (BoT) has said it is not intending to close or clamp on village community banks (VICOBA) and other microfinance institutions as it prepares regulations for microfinance service providers.
In the clarifications issued yesterday, BoT said the aim of enacting the law was to protect all stakeholders involved in the microfinance businesses, users and service providers by putting records, operations and leadership.
“BoT is not intending to close or clamp on community groups offering microfinance services like Village Community Banks (VICOBA), individuals and small enterprises contrary to false information circulating in the social media,” said Mr Victor Tarimu, the BoT Manager, Forex Shops and Small scale money services.
The bank will take stern measures against individuals, companies and institutions divulging false information and fear to the public that it is closing or clamping the microfinance businesses.
In December last year, BoT issued a public notice stating that it is preparing regulations for various categories of microfinance service providers identified in the Microfinance Act 2018 and for licencing purposes.
Section 12 of the Act inter alia, mandates the Bank of Tanzania to licence, regulate and supervise microfinance business in Tanzania Mainland.
Section 16 of the Act prohibits any person from carrying out any microfinance business, unless such person is licenced by the Bank of Tanzania.
Applicable sanctions for violation of this Section are also provided for in the Act.
The notice required all microfinances to submit all the required information regarding their operations by Friday this week.
However, on Friday last week, the Bank revised the notice to extend the deadline to submit information before the end of this month and exempted Savings and Credit Cooperative Societies (SACCOS) from complying with the notice.
The Bank also said that the law focuses at protecting stakeholders from risks that may arise from money businesses like money laundering and theft.
“The central bank is aware of the unregistered individuals, institutions and groups dealing with money businesses.
The law has given one year transition period, when the regulations are being enacted, to ensure the service providers complete registration,” the statement said.
During the transition period, the service providers may continue to offer their services without full registration.
BoT said further that all stakeholders will be fully involved in the making of the regulations.
The Bank is preparing Regulations for the different categories of microfinance service providers identified in the Act, including licencing regulations.
All persons who are engaging in microfinance business will be required to obtain formal licence from the Bank of Tanzania and observe other requirements of the Regulations, once they are issued and published in the Government Gazette.