Money Lending Agreement In Uganda

The orders rewrite that UMRA must assess the adequacy of the management and board of directors of a money lender and any person employed by or associated with the lender. This is consistent with the appropriate and appropriate review of a financial institution`s board of directors and management. While the criteria for money lenders will likely be much less stringent, it is reassuring to know that the lenders` management and board of directors will be monitored to ensure that the deal is not done by undesirable people. In addition, any changes to the management of a lender must be approved by UMRA after a similar assessment of the candidate proposed by UMRA. Regulations require lenders to maintain a physical address and keep and maintain records of their business for a period of 10 years. This is the same period as that required by financial institutions under the Money Laundering Act. In addition, money lenders are required to post interest charges at any time in a visible location on their premises and to keep proper accounting records, including a register of securities and debtors. This will increase the transparency of the economy and strengthen confidence in lenders. UMRA is also required to keep a record of all lenders, which can be verified by members of the public for a fee.

This was a dispute over the defendant`s refusal to disclose a certificate of ownership on the basis of an agreement on the matter. A company wishing to carry out money lending transactions is required to apply for a licence from the Uganda Microfinance Regulatory Authority (UMRA) by filing its founding documents, information provided by its directors and secretaries and paying the necessary fees. A licence issued to the lender is valid each year until December 31 and can be renewed each year. The license is not transferable or surrendered. After issuing, the licence must be issued in all premises where the lender conducts money lending transactions. The regulations aim to curb the hithertly unorthodox practices of lenders, to withhold important documents from a borrower in order to guarantee repayment, by taking the borrower hostage for the most part. The regulations provide that a lender cannot require the following documents as collateral for advanced money: identifiers or passports, bank cards or security codes for bank cards or account books, or a signed ownership or asset transfer instrument before the loan is paid. The borrower also does not face the risk of a lender losing its documents. If a money loan transaction is disguised as a sale or sale of assets, such a transaction may be cancelled by the courts and may result in the withdrawal of the lender`s licence. In 2016, Uganda reformed its laws with the passage of tier 4 Microfinance Institutions and Money Lenders Act, 2016 (the law). The aim of the law was to legitimize and strengthen confidence in microfinance institutions (SACCOS, self-help groups, non-deposits and community microfinance institutions) and lenders that had long remained off the radar of any regulatory authority. The adoption of the law was not only an acknowledgement of the important role played by informal lending agreements in promoting financial inclusion, reaching Uganda`s non-bank population, but also a strengthening of borrowing and credit legislation in Uganda.