HOW ONE MAY OBTAIN A LICENCE FOR DEPOSIT-TAKING MICROFINANCE INSTITUTION IN RWANDA (HOW TO ESTABLISH DEPOSIT-TAKING MICROFINANCE INSTITUTION IN RWANDA

Law applicable

• THE CONSTITUTION OF THE REPUBLIC OF RWANDA OF 2003 REVISED IN 2015
• LAW NO 072/2021 OF 05/11/2021 GOVERNING DEPOSIT-TAKING MICROFINANCE INSTITUTIONS
• REGULATION N° 02/2009 ON THE ORGANISATION OF MICROFINANCE ACTIVITY
• AMONG OTHERS
• supervisory authority is the central bank being National Bank of Rwanda or any other body to which the law may assign the powers to supervise financial service providers in Rwanda
• “Micro finance institution”: any organization that exercises micro finance activities regardless of its legal status, including savings and credit cooperatives
• Deposit-taking microfinance institutions are categorized as a deposit-taking microfinance company or a deposit-taking microfinance cooperative.
• The first category of microfinance is constituted of informal micro finance institutions constituted as tontines, of any type, and which only operate on the basis of the contributions made by their members. They require no legal status or licensing from the Central Bank to exercise their activities. However, they must register with the nearest local administrative entity.
• The second category is constituted of micro finance institutions having the legal status of savings and credit cooperatives and whose collected deposits total less than Rwf 20 million. These institutions may not have more than one point of service or service outlet.
• The third category is constituted of micro finance institutions collecting deposits from the public that have adopted a legal status of corporation or of a savings and credit cooperative and whose deposits total or exceed Rwf 20 million.
• They are required to observe all rules of management and prudential norms defined in the microfinance law and its applicable regulations.

Below is the procedure of obtaining a license of deposit taking micro finance institutions in Rwanda;

1. Consult a lawyer about your intention to establish Deposit taking Microfinance institution in Rwanda.
2. Decide on category whether the intended microfinance will be a company or cooperative.
3. If the intended microfinance is a company, mobiliser capital of at least RWF 300,000, OOO for microfinance and register a company with one of the objectives being carry out financial services.
4. If the intended microfinance is a savings and credit cooperative under third category, mobilize minimum capital of RWF 5000,000 and register cooperative if not yet registered.
5. Prepare the specification of the purpose and objectives of the intended microfinance and a business plan including an action plan, Pro forma statements for a minimum period of two years of activity, A manual of procedures that complies with the requirements and a credit policy manual.
6. Photocopy certificate of registration as proof of legal personality.
7. For a Micro Finance institution other than a cooperative indicate the amount of the subscribed capital and the amount of the paid-up capital for each shareholder as well as recent certified balance sheet of every legal entity holding 10 % and more than capital.
8. A company or cooperative which intends to carry out deposit-taking microfinance institution operations should then prepare its application for a license to the  Governor of supervisory authority in the prescribed form and with proof that it has the required minimum paid-up capital.
9. A company or cooperative which intends to carry out deposit-taking microfinance institution operations should then   pay a prescribed  licensing fee.
10. For a cooperative which intends to carry out deposit-taking microfinance institution operations should pay minimum capital RWF 5000,000 in the central bank blocked account
11. A company or cooperative which intends to carry out deposit-taking microfinance institution operations should attach all the above documents and submit application in the prescribed form to the central bank for consideration.
12. The supervisory authority/central bank may require the applicant to provide additional information or documents related to the application.
13. The Central Bank/ supervisory authority shall consider the application, issue a decision on the same and give notice of its decision within a time period not exceeding 60 days after an application has been filed in full accordance with the requirements of the law
14. The supervisory authority shall issue the license to the applicant who fulfils all the requirements of this Law and relevant regulations.
15. The persons who will be in charge of administration and management of the microfinance institution, union or federation must demonstrate the highest character and possess technical competency as well as the foresight and integrity needed to exercise these functions.
16. The supervisory authority may reject an application and notify the company or cooperative the grounds for the rejection of the application.
17. Where the company or cooperative which applied for the license is not satisfied with the response received, such a company or cooperative may appeal against it to the supervisory authority within one (1) month of the response receipt.
18. The supervisory authority must provide the company or cooperative with the response within three (3) months of date on which the appeal was lodged.
19. In case the company or cooperative which lodged an appeal is further not satisfied with the response provided, such a company or cooperative has a period of six (6) months from the date of the response receipt to refer the matter to the court of Law.

Author is A regional transactions legal consultant (ADVOCATE) at NOA REGIONAL ASSOCIATED ADVOCATES AND LEGAL CONSULTANTS EAST AFRICA
Email address: onlinetransactionconsultancy@gmail.comcontacts. +250787311255,+256788105242
What sup +250787311255

NOTE: whereas the author has made necessary efforts to ensure the accuracy of this post, it is not intended to provide specific legal advice to a particular individual as individual situations may differ. For specific professional/ legal transaction advice on this subject matter and related subject, you may contact the author or contact any transaction legal consultant of your choice.
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