Deposit taking microfinance service providers under Tier One category are regulated under the Banking and Financial Institutions Act, No. 5 of 2006 (hereinafter referred to as “the Act”) and the Banking and Financial Institutions (Microfinance Activities) Regulations 2014 (herein referred to as “the Regulations”).

It is illegal in Tanzania to operate a deposit taking microfinance business without first obtaining a licence from the Bank of Tanzania (“BoT”), which plays a role of a central bank in the country.

The applicant of the licence under tier one is required to apply using a letter as prescribed by the Regulations and in addition, accompanying the followings: –

(a).   Proof of the payment of non-refundable application fee of Tanzania Shillings Ten Million;

(b).  Authenticated legal document or board resolution authorizing the signatory of the application for licence;

(c).   Proposed unregistered memorandum and Articles of association for the proposed entity;

(d).   Proof of source and availability of funds for investment as capital of the proposed institution;

(e).      List of subscribers and proposed members of board of directors and Chief Executive Officer;

(f).        Proof of citizenship of every subscriber and every proposed directors and senior management officers. This includes a detailed cv, passport size photographs…;

(h).      Home country certification if applicant is foreign bank or financial institution;

(i).         Declaration that the funds invested have not been obtained criminally or associated with a criminal activity;

(j).        Projected balance sheets, income statements and cash flows statements for four years;

(k).      Business plan for the first four years of operations including strategies for growth;

(l).      Brief description of how the proposed microfinance institution will benefit the country;

(m).     Certified copies of annual returns and tax returns of every significant subscriber, proposed members of the board and Chief Executive Officer;

(n).       Credit reference report for every significant subscriber, every proposed director and senior management officer;

(o).        Statements from two independent persons vouching for the good moral character and financial responsibility of every significant subscriber, directors and senior management officers.

Note Also that: 

• BoT may direct that additional information be provided to it before the determination of the application for the licence.

•  BoT, after receiving the complete application for licence, shall determine the application within ninety days, and if satisfied, will grant licence.

• A microfinance bank must be organized in form of a company limited by shares as legal acceptable vehicle for carrying such a business in Tanzania and is required to incorporate words ‘microfinance bank’ in its business name.

• A Microfinance bank shall commence its operations within twelve months from the date of being granted with the licence.

• A Microfinance bank must commence its operations with, and maintain a minimum core capital of, not less than Tanzania Shillings five billions shillings or such higher amount as BoT may prescribe.

Disclaimer:

This publication is prepared for general information purposes only and should not be treated or relied upon as legal advice unless agreed to in writing by Litcot Attorneys (“the Firm”). The Firm neither assumes nor accepts any liability or responsibility whatsoever to any person, being natural or legal, for any usage other than that which is specified herein. For legal advice, please contact the Firm, or your legal attorneys.