Uganda - Apply for a Licence to Establish Micro-Deposit Taking Institution. (MDIS)

Advertisement

Procedure

MDIS are institutions regulated by the central Bank to take deposits and offer other bank service.

• They have reduced capital requirements as opposed to commercial Banks or retail banks.

1. An application for a licence shall be made in duplicate, in the form prescribed by the central bank of Uganda and shall be accompanied by the supporting documents specified in the section of Required document section under this procedure.
   • A company which desires authority to carry on microfinance business in Uganda shall apply in writing to the Central Bank for a licence under MDIs.
2. An applicant for MDIs Licence should first register as a legal entity, either as Non-Government organisations or as company limited by shares, or as companies limited by guarantee (foundation)
3. The third step is the company to seek to get a licence to operate as a micro finance deposit taking organisation MDI by submitting the required documents.
4. Attach the required documents and information on the application form. These include the following.
   • CV and profile of the promoters or proposed directors as a microfinance deposit taking institution (MDIs) who must not have been convicted of any financial impropriety or financial fraud.
   • Statement of application relevant to experience in micro finance Business. Though this is not a determining factor. Indicating experience directors is a key.
   • A business plan of the organisation.
   • Scope of operations, to include service to be offered, area of operation and relative activity.
   • Proposed staff development programs, with clearly explanations how staff skill and expertize will be developed.
   • Management and administration, including capacity of proposed senior management.
   • Evidence of applicant ability to provide adequate capital through retain earnings by providing a business financial projections of profit and Loss & cash flow.
   • Evidence of applicant ability to meet the statutory minimum paid up capital, and minimum ongoing capital adequacy requirements and the applicant ability to inject core capital when need in the future.
   • A copy of registration document either Article or memorandum of Association for companies or a certificate of registration as NGO.
   • Verified official notification of a company’s registered place of Business.
   • Amount Authorised and paid up capital.
   • The prospective place of operations indicating that of the Head office.
   • Certificate of time deposit equivalent to 75% of the required minimum paid up capital that is UGshs.3 billion since the minimum capital is UGsh.4 billion. The applicant need to deposit 75% that is, with the Bank of Uganda or a licensed bank and provide evidence of the money deposited and will be retained until the Licence is approved.
   • Sworn declaration of assets and liabilities of founder shareholders.
   • Biological data of each of the founding shareholders, with a breakdown of proposed ownership structure and proposed directors and officers using stipulated form.
   • In case of wholly owned subsidiary of a commercial Bank or financial institution, a copy of board resolution approving proposed investment.
   • In case of a foreign financial institution a copy of approval granted by home regulator.
   • In case of a company in operation a copy of latest Audited balance sheet and profit and loss Account for each of the three years preceding application.
   • Two copies of feasibility study of the institution, showing the nature of planned business, organisation structure planned internal monitoring procedure, and projected financials. It should also include mission statement and overall goals, market research ownership and corporate governance, management and business strategy and projected financial statement.
   • Detailed notice of financial statement including source and uses of funds, provision for bad debts cash and other liquid assets to be maintained, small scale and micro credit to be made and interest receivable, major source of deposits and investment earnings to be made, starting policy and categories of business and productive activity to be financed, fixed assets, including business premises, operating expenses including rent, salaries ,benefits and directors remunerations capital structure and other income including commission fees net operating profit and loss, financial analysis and interest rate sensitivity analysis.
   • Copy of the applicant risk management, tailored to its needs and circumstances covering the following risks, credit, liquidity, interest rate, foreign exchange, operation and strategic risk.
   • Credit manual,including but not limited to lending and provisioning,borrowers criteria,amounts,terms and collateral and lending policies and procedure must take into account the different steps of credit process,including analysis, negotiation,approval,disbursement,monitoring and collection,taking into account and prudent practice including foreclosure.
     • Human resource manual
     • Operational manual
     • Liquidity and finds management policies and procedure.
     • Accounting procedure manual.
     • A fully completed questioner on institution premises.
   • A written request to the central Bank for a date and time for the interview during which its application for licence to operate an institution shall be appraised.
   • Availability for onsite inspection of applicant’s institution premises to determine adequacy of the institution security system,as well as to confirm other matters.
   • Application fees of approximately UGsh.500,000.
   • Licence fee of approximately UGshs.1,000,000 payable by successful applicant within 14 days of notification of the decision to grant a Licence.
   • Application for a licence to conduct micro finance business directed to the Executive Director,supervision function,Bank of Uganda.
   • When the application is accepted,there is a six month period for consideration and grant or refusal to grant a Licence.
   • Set up a banking information management system which function and expandable features including but not limited to accounting, portfolio tracking,deposit monitoring, customer information system,loan application,approval and repayment,saving account information,multiple brunching, user interface,reporting system,backup and recovery,end of period recovery processing,administration support infrastructure and maintenance and version control and upgrade strategy.
   • The central Bank,shall on the third working day after appraisal of interview,instruct applicant to run public notice for three consecutive days in a daily newspaper with national circulation as per given schedule, and provide a copy to central Bank.
   • Directors and shareholders are to be people who have not been involved in illegal financial activities or who have non- performing loans in financial institution or who have been suspended from directorship in other financial institution.
   • There are pre licensing inspection which checks appropriateness of location office is key and covers location,security,internal control system,presence of cash reserves endorsed and evidenced payment of 100% of capital as stated in the requirement,presence of information management system, safe security cameras,and separation of banking hall from back rooms.
   • Public announcement of establishing of a micro finance deposit taking institution,also to be carried in at least three national dailies,for not less 3 days.
5. Upon receiving an application with all the requirements stated above, the Central Bank shall within six months consider the application and may, grant a licence, with or without conditions or refuse to grant a licence.
6. Before issuing a licence under this Act,the Central Bank shall take into account all the matters it considers relevant to the application and,without limiting the generality of the foregoing,the Central Bank shall have particular regard to—
   • whether the institution will be operated responsibly by persons who are fit and proper for involvement in microfinance business in accordance with the criteria specified in the Act;
   • the business record and experience of the applicant or applicants;
   • the nature and sufficiency of the financial resources of the applicant as a Source of continuing financial support for the institution;
   • the soundness and feasibility of the plans submitted by the applicant or
   • applicants for the future conduct and development of the business of the institution;
   • whether public interest will be served by the granting of the licence.

Advertisement

Required Documents

• A copy of the memorandum of association and articles of association or other instrument under which the company is incorporated;
• Verified official notification of the company’s registered place of business;
• The prospective place of operation, indicating that of the head office and branches;
• Biographical data on each of the founders, proposed directors and officers;
• The information which is necessary for assessing the trustworthiness of the applicant;
• The information which is necessary for assessing the professional qualifications, as required for managing the institution and of the proprietors;
• A copy of the latest balance sheet of the company or such other suitable evidence of the resources needed for business operations;
• A feasibility study of the company showing the nature of the planned business, the organizational structure and the planned internal monitoring procedures of the company and covering inter alia the following aspects—
  • A business plan and financial projections for at least three years (including the assumptions underlying the projections and a sensitivity analysis of the plan on varying assumptions).
  • A certified copy of the resolution of the Board of Directors, authorizing the preparation and submission of the application.
  • An information sheet for the applicant and for each of its substantial shareholders (if corporate), subsidiaries or affiliates.
  • Existing financial institutions and companies which have been engaged in other businesses before applying to do financial institution business, should provide certified copies of audited financial statements for the past three years prepared in accordance with generally accepted accounting principles.
  • If the most recent audited accounts are more than six months out of date, they should be accompanied by management accounts (which need not be audited) showing the current financial position and the current results of the institution.
  • Individual credit references for the applicant and each of the substantial shareholders, directors and officers from his or her bankers.
  • Personal declaration form for each of the proposed directors, officers and substantial shareholders ( if natural persons).
  • Proposed capital structure of the MDIs financial institution.
  • With respect to foreign applicants, a statement from the supervisory authority of the home country declaring that it has given prior approval or a “No Objection” for the establishment of a subsidiary or any other office in Uganda, and that the applicant’s chairperson, directors, managers and substantial shareholders as a whole, are fit and proper persons within the meaning of the Act.
• Any other information relating to the viability of the proposed institution or other matters which the applicant may consider relevant.
• Any other information which the Central Bank may request the applicant to provide.

Office Locations & Contacts

Uganda Registration Services Bureau - Head Office,
Uganda Business Facilitation Centre
Plot 1 Baskerville Avenue,
Kololo,
Kampala
Toll Free: 0800 100 006
Call Center: +256 417 338 100
Phone: +256 414 233 219 / 0417338000
Fax: +256 414 250 712
Email: [email protected] (General Correspondences)
Email: [email protected] (For Enquiries)
Website:Link
Bank of Uganda - HEAD OFFICE,
Physical Address:Plot 37/45
Kampala Road
Kampala, Uganda
Postal Address: P.O Box 7120,
Kampala, Uganda
Telex: 61059
Telephone numbers: +256-414-258-441/6
Fax: + 256-41-4230878 , +256-41-4233818
Email: [email protected]
Website: Link

Eligibility

• Any company, firm or enterprise or person is eligible to make an application for MDIs Licence to run a Micro Finance Bank in Uganda.
• This application allows a person to operate a Micro Finance Bank in Uganda under MDIs Licence.
• In Uganda no person shall, operate a Micro Finance Bank in Uganda unless the institution is registered under MDIs and authorized by the Central Bank of Uganda.

Fees

• Application fees UGshs. 500,000.
• Annual Licence fees is UGshs. 1,000,000.

For More information on the charges Visit this Link:Bank charges

Validity

Valid for 1 years

Documents to Use

Please attach documents that can be used by people. e.g. links

Sample Documents

Please attach sample completed documents that would help other people.

Processing Time

Processing take 6-12 months.

Related Videos

Videos explaining the procedure or to fill the applications. 
Attach videos using the following tag <&video type='website'>video ID|width|height<&/video&> from external websites. 	
Please remove the '&' inside the tags during implementation.
Website = allocine, blip, dailymotion, facebook, gametrailers, googlevideo, html5, metacafe, myspace, revver, 
sevenload, viddler, vimeo, youku, youtube
width = 560, height = 340, Video ID = Can be obtained from the URL of webpage where the video is displayed.
e.g In the following url 'http://www.youtube.com/watch?v=Y0US7oR_t3M' Video ID is 'Y0US7oR_t3M'.

Instructions

• For issuance of MDIs license, please submit the duly completed form, to Central Bank of Uganda
• For purposes of application for a new license, an applicant is required first to seek approval name from the Central Bank of Uganda and thereafter will be advised on the documents to be submitted together with the duly completed form.
• Upon satisfying all the requirements and paying the applicable licensing fees the applicant will be issued with MDIs license.
• All information provided shall be treated as confidential.
• No micro finance business shall be transacted in Uganda except by a company, which is in possession of a valid licence granted by the Central Bank authorizing it to conduct microfinance business in Uganda.
• A micro finance deposit-taking institution licensed under this Act shall use the word “MDI” after its name.
• a company shall not be granted or hold a licence unless it has a minimum paid-up capital of twenty five thousand currency points invested in such liquid assets in Uganda as the Central Bank may approve.
• An institution shall not open a new place of business or change the location of an existing business in Uganda or change its hours of business without submitting a written application for the purpose to the Central Bank

Required Information

1. Name of applicant
2. Head/ Main office
3. Physical and postal address of head office/ proposed new outlet
4. Date of incorporation
5. Form of incorporation
6. Description of the applicants business or functions
7. Certificate of incorporation Number
8. Details of subsidiaries and affiliates (Name of Outlet, County, City/Town, Street, Building, Date opened)
9. Particulars of shareholders (Name, Nationality, Date of acquisition, Amount of shareholding, % of shareholding)
10. Particulars of directors (Name, Nationality, Date of appointment, Level of education)
11. Particulars of the officers in the order of seniority (Name, Designation, Nationality, Date of appointment)
12. Ownership profiles
13. Shareholding in any other financial institution
14. Name of applicants external auditors
15. Declaration

Need for the Document

Please provide the need for the procedure. e.g. Birth Certificate - why do we need to have a birth certificate? 
 

Information which might help

• MDIs are allowed to take deposits from the public and to lend these.
• They are classified as Tier 11 institutions. The main activity of MDIs as taking of time deposit and savings from the public or savings from the public and their employment in Lending.

Micro Deposits Taking Institutions MDIs address the following issues:

• Licensing.
• Liquidity and fund management.
• Capital Adequacy.
• Asset quality.
• Reporting for micro deposit taking institution.
• List of restricted activities.

Other uses of the Document/Certificate

Please explain what are other uses of obtaining this document/certificate.
e.g. Birth Certificate can be used as proof of identity.

External Links

• External Link
• External Link

.

Others

More information which might help people.