AfricaPress-Tanzania: THE central bank of Tanzania has issued a number of directives to microfinance institutions after receiving a number of complaints from borrowers, threatening to deregister them if they don’t comply with the orders.
According to an announcement issued by the Bank of Tanzania’s (BoT) Manager for microfinance and bureau de change operations, Victor Tarimu, one of the directives requires all microfinance institutions to submit to BoT a comprehensive report on customers’ complaints.
The report on complaints should include the clients’ names, telephone numbers, residence (region, district and branch), the amount of loan issued, the date of loan issuance, interest rate, other charges, the rate of installment, the amount refunded, the source of complaints, the date when the creditor received complaints and the action taken to address the complaints.
According to the BoT, the microfinance institutions must, within two weeks with effect from Friday (May 22, 2020), devise a comprehensive system of resolving clients’ complaints as per Regulation No. 54 of the regulations that govern microfinance service providers.
Mr Tarimu also issued a three-week ultimatum with effect from Friday (May 22, 2020) to the creditors to resolve clients’ complaints, including submitting to the Bank of Tanzania all complaints that will not have been solved for further action by clearly stating reasons behind their failure to do so.
According to Mr Tarimu, BoT was forced to issue the directives after it constantly received many complaints from clients served by microfinance institutions.
The complaints include failure by lenders to provide loan agreements to clients, refusal by such microfinance institutions to issue loan statements when clients want to settle their debts in time and imposing high rates and charges when borrowers want to repay their loans before the agreed timeframe.
Other complaints received by the central bank include intentional deliberate delays by lenders to respond to clients’ requests that relate to their plan to settle their debts before the agreed period.
Mr Tarimu said failure by the microfinance entities to work on the directives will invite punitive legal measures, including deregistering them.
The BoT stressed on the importance of the microfinance institutions to adhere to the Microfinance Services Act, 2018 whose application started on November 1, 2019 as they continue with processing of license from the Bank of Tanzania.
The BoT called upon microfinance clients with complaints in the country as explained by the central bank to submit them in writing to the lenders.
According to Mr Tarimu, the copy of the document should be submitted to BoT Director of Banking Supervision at the head office in Dar es Salaam.
In 2018, the Parliament passed the Microfinance Services Bill for an Act to provide for the licensing, regulation and supervision of microfinance business; and to make provisions for related matters.
Under the law, microfinance institutions include community microfinance groups, financial organisations, foreign owned microfinance service providers, individual moneylenders and credit companies.
