The Bank of Tanzania (BoT) has published new requirements aimed at safeguarding borrowers from abusive digital lending practices by tier-2 microfinance institutions.
According to the bank, the requirements aim to ensure adherence to consumer protection principles by reducing abusive lending practices and improving transparency in the digital lending market.
Additionally, BOT seeks to bolster the industry’s reputation, build consumers’ confidence, and ensure a secure environment for both borrowers and lenders within the digital microfinance sector.
Consequently, digital lenders are required to clearly display:
- Interest rates
- Fees
- Charges
- Payment penalties
- Loan limits, and
- Product tenures
on their platforms to help customers make informed decisions when applying for loans.
The digital lending platforms must also protect customers’ data in compliance with the relevant laws, as well as indicate the name of the microfinance service provider as registered by the central bank.
“A microfinance service provider must have a robust and secure lending platform for conducting digital lending operations with respective products.
The referred platform shall be available and can be tested,” said the Bank of Tanzania.
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The platforms must also use clear and simple Kiswahili or English, provide contact information such as phone numbers and email addresses, and employ knowledgeable, ICT-savvy staff to offer technical support to customers.
“A microfinance service lender that has obtained a no-objection letter from the Bank to offer digital loan products and services, shall not operate more than one digital platform,” the Bank stated.
“However, a digital lending platform can offer more than one digital loan product or service,” it continued.
The banks also cautioned microfinance institutions against accessing customers’ contact lists or social media accounts, as the Bank of Tanzania believes such actions could be used to harass customers in cases of delayed loan repayments.
The Central Bank of Kenya🇰🇪 Officially Publishes Regulations to Protect Consumers from Digital Lendershttps://t.co/5mKyhSelqB @CBKKenya @dlak_ke
— BitKE (@BitcoinKE) March 22, 2022
Existing licensed microfinance service providers who intend to offer digital loan products and services, are required to apply to the Bank for a no objection letter.
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