HE Yoweri Kaguta Museveni has warned money lenders against charging an exorbitant 20% interest on loans per month which affects the economy.
Museveni made the comments while chairing the NRM Caucus at Entebbe State House on Thursday afternoon and further directed the Minister for Finance to put out a statutory instrument within two weeks on the interest paid to money lenders.
“These moneylenders who are causing suicide to our young people, who allows them to operate? Why should someone charge 20% interest on a loan per month? This must stop,” wondered Museveni.
He added, “On the problem of corruption, I urge the members not to keep quiet. We don’t need it and it’s not necessary, we have the capacity to crush all the corrupt people and we shall do it, all we need is the facts.”
Uganda Microfinance Regulatory Authority Money Lending Regulations
A money lending business should be a company registered with Uganda Registration Services Bureau (URSB) and licensed by Uganda Microfinance Regulatory Authority (UMRA) in accordance with the Tier 4 Microfinance Institutions and Moneylenders Act, 2016.
- In money lending business, the money lender should have a postal and physical address of the company (Form 18).
- A money lender shall issue a receipt to a borrower for every repayment made on a loan and keep records for a period of 10 years.
- A money lender should give a loan agreement to a borrower to sign not a sales agreement.
- A money lender shall not dispose off any collateral given by a debtor as a sale, pledge or collateral for the loan advanced to him, unless 60 days have passed since a written demand notice has been issued to the debtor requiring him or her to pay any outstanding monies on the money advanced.
- A money lender may, before carrying out a sale of collateral by public auction or private treaty, undertake a valuation and obtain a forced sale value of the collateral to determine the market value of the property.
- A borrower shall retain the right to pay any outstanding monies and costs to redeem the collateral before it is disposed off.
- Where a money lender takes possession of collateral under a money lending agreement, he or she is under a duty to exercise the same care and diligence over the collateral in his or her custody as would a prudent owner do with the property.
- Where a collateral in possession of a money lender is lost, damaged or destroyed, the money lender shall be liable to pay the value of the collateral, or the replacement value of the collateral, after deducting the amount of the principal and interest if any, outstanding within a reasonable time.
- A borrower may, at any time upon request made in writing to the money lender, access information from the money lender.