The Bill sets out to provide for the licensing, regulation and supervision of microfinance business and related matters. The Bill provides that microfinance business shall be carried out by microfinance service providers and in accordance with the provisions of the Bill.
Categories of Microfinance Service Providers
It provides 4 categories of microfinance service providers as follows: –
- tier 1 deposit taking banks & microfinance banks;
- tier 2 non-deposit taking credit companies & financial organisations;
- tier 3 SACCOS; and
- tier 4 community financial groups, individual money lenders & community-based organisations.
Place of Business
A microfinance service provider is required to have a place or places of business with proper address for carrying out its microfinance activities.
Application for registration
A person who intends to undertake microfinance business under Tier 4 is required to apply for registration to the B.O.T or Delegated Authority in the manner as may be prescribed in the regulations.
The Bill requires every microfinance service provider in Tier 1, 2 and 3 to prepare yearly accounts in accordance with the prescribed standards and requirements of the international financial reporting standards.
Monitoring of Microfinance Business
The Bill provides for continuous monitoring of business and affairs of the microfinance service provided under Tier 4 in accordance with the relevant regulations.
This includes principles intended to ensure transparency of the products and services of the microfinance service providers, fair treatment and safeguard of the interests and rights of consumers and fair complaints handling and dispute resolution mechanism.
Under the Bill Tier 1, 2 and 3 are required to have licences when carrying out any microfinance business. Failure to procure a license is an offence liable to a fine of not less than TZS 20 million but not exceeding TZS 100 million or imprisonment for a term ranging between 2 – 5 years. In case of an offence under Tier 3, a fine of not less than TZS 10 million Shillings but not exceeding TZS 50 million or imprisonment for a term of not less than 2 but not exceeding 5 years or both.
A foreign owned microfinance service provider undertaking microfinance business in Tanzania is required to comply with applicable laws on local content including employment and training of Tanzanians.
Compliance with Anti-Money Laundering Act
A microfinance service provider is required to comply with the Anti-Money Laundry Act and establish procedures for internal control for the purpose of identifying and reporting suspicious transactions.