The Uganda Microfinance Regulatory Authority is suggesting new changes in the traditional money lenders’ loan structures.
The changes among others suggest caps on interests charged by the money lenders.
The changes are part of the proposed amendments to the Microfinance laws and regulations.
Ms. Edith Namugga, the Executive Director Uganda Microfinance regulatory authority said they are mandated to make sure that there is sanity and order in the tier 4 microfinance sector in the country.
Tier 4 financial institutions governing law has been in place for over five years.
She further informs that the president is also the minister of finance to effect section 90 of this law which seeks to come up with a cap on the interest rates of money lenders’ loan facilities, which is not appropriate for market stability at the moment, hence other measures.
She says that to improve confidence, lending behavior and stability in the market without capping the interest rates, they have decided to work on section 112 of the Act, which allows the minister to make regulations for the better carrying into effect of the Act provisions, including the lending conditions. Ms. Namugga speaking….
Namugga revealed that the authority is coming up with a “loan shop” where interest rates of the various institutions will be displayed for the borrowers to see and decide who to borrow from, as well as determine the loan period.END.