RBZ crafts deposit-taking law

THE Reserve Bank of Zimbabwe (RBZ) has crafted draft guidelines to regulate Deposit-Taking Microfinance Institutions (DTMFI) and invited stakeholders to input into the document before its adoption.



In a statement last week, the RBZ said it recognises the importance of the microfinance sector in fostering access to financial services for low-income households and micro, small and medium enterprises.

The central bank gave stakeholders until July 8 to submit their proposals.

“These guidelines provide the minimum standards and practices for the licensing and continuous regulation and supervision of DTMFIs operating in Zimbabwe. The guidelines should be considered in conjunction with the applicable statutes. No DTMFI shall commence deposit-taking microfinance operations without the prior authorisation of the Reserve Bank,” RBZ said.

According to the draft proposal, applicants for DTMFI licences are expected to maintain on an on-going basis, a minimum paid-up share capital of $5 million or as may be prescribed and are prohibited from operating without a microfinance licence in terms of section 7 of the Microfinance Act.

As part of the shareholding thresholds in DTMFIs, the percentage limit for a financial institution would be 100%, a member of the executive management would be limited to 5% and any other person would be allowed a cap of 25%.

“A DTMFI shall have a board of directors of not less than five members with at least three fifths of the board membership being non-executive directors, of which independent non-executive directors shall be the majority. At least one of the non-executive directors has experience of managing microfinance business or have relevant exposure to microfinance business,” RBZ said.

The proposed guidelines are meant to ensure the safety and soundness of the microfinance sector and ultimately financial stability in the economy and promote financial inclusion through encouraging and facilitating the development of the micro finance sector.

Other objectives include enabling DTMFIs to maintain adequate capital and liquidity levels that meet customers’ obligations at all times and promote public confidence in the financial sector. They also help raise awareness on the minimum licensing requirements and foster supervisory standards applicable to the microfinance sector.

The RBZ also want DTMFIs to adopt transparency and accountability leveraging on international best practices in the regulation and supervision of their business.

By March this year, RBZ had listed an additional eight companies as micro-finance institutions, bringing the total number of registered micro-finance institutions to 163.

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