Uganda - Apply for a Microfinance Bank License

Advertisement

Procedure

Apply in Person
Stage 1: Approval of Name

1. Contact the Central Bank of Uganda at an early stage for a preliminary meeting to discuss Central Bank of Uganda licensing requirements and related issues
2. Seek Bank of Uganda’s approval for the use of the word Microfinance Bank” e.g. XYZ Microfinance Bank Limited
3. Book an appropriate name with the Registrar of Companies and write to the Central Bank to seek approval for the name.
   • The name a search and reservation takes one day to complete and a fee of UGsh.20,000 is charged for the process.
4. After the name has been approved by the Central Bank, you should proceeded to the Registrar of Companies for incorporation of the proposed bank as a limited liability company.
5. Upon incorporation of the Limited Liability Company, apply to Bank of Uganda for a Microfinance Bank License.

Stage 2: Application for Licence

1. Complete and submit a certified Application Form to Bank of Uganda accompanied by all supporting documents, including:
   • Certified copy of the Certificate of Incorporation.
   • Certified copy of the tax Personal Identification Number (PIN) certificate.
   • Certified copy of the registered Memorandum and Articles of Association indicating core capital (at least UGshs 50 million or UGshs 100 million for community and nationwide microfinance bank business, respectively).
   • Verified official notification of the company’s registered place of business, including the prospective places of business (Head Office, branches, agency and outlets, if any).
   • Pay a non-refundable application fee of UGshs 1,000,000 to the Central Bank by Bankers cheque or by such other mode of payment as the Central Bank may prescribe.
   • A declaration witnessed by an advocate or Commissioner of Oaths indicating that the proposed entity has no existing scheme of arrangement with its creditors.
2. Provide evidence of minimum core capital (UGshs 50 million and UGshs 100 million for a “community” and “nationwide” microfinance bank business, respectively)
3. Prepare and submit a comprehensive feasibility study and business plan
4. Duly complete and submit the “Fit and Proper Forms” for all significant shareholders (at least 10% shareholding) and proposed directors accompanied by supporting documentation (certified)

Stage 3: Letter of Intent
Upon assessment and fulfilment of all the requirements in stage two, the Central Bank will issue a Letter of Intent, which is an approval in principle and advises the applicant on the next steps and requirements to be fulfilled before issuance of a licence and approval to commence operations, including:

• payment of licence fees to the Central Bank by bankers cheque or such other mode of payment that the Central Bank may prescribe (UGshs 2,000,000 for nationwide microfinance bank.
• preparation of operating premises to meet prescribed standards in readiness for inspection by the Central Bank
• completion and submission of the “Fit and Proper” Forms for key senior managers (to be guided by the Central Bank) accompanied by all the supporting documentation.
• preparing and putting in place the proposed management information system (MIS) and other institutional structures required to conduct the microfinance bank business

Stage 4: Issuance of Licence

• The Central Bank, if satisfied that the applicant has met all the requirements of the above three stages, May then issue a licence; the Central Bank will duly specify the institution by placing a notice in the Uganda Gazette, thereby legally authorizing the applicants to commence microfinance bank business.

Advertisement

Required Documents

• Certified copy of the Certificate of Incorporation.(certified Copy)
• Certified copy of the tax Personal Identification Number (PIN) certificate.
• Certified copy of the registered Memorandum and Articles of Association indicating core capital (at least UGshs 50 million)
• Verified official notification of the company’s registered place of business, including the prospective places of business (Head Office, branches, agency and outlets, if any) Registered Address (certified Copy Form 18)
• Pay a non-refundable application fee of UGshs 1,000,000 to the Central Bank by Bankers cheque or by such other mode of payment as the Central Bank may prescribe.
• A declaration witnessed by an advocate or Commissioner of Oaths indicating that the proposed entity has no existing scheme of arrangement with its creditors.
• Forms of particulars of directors and company Secretary (certified Copies Form 20)
• National Identity Cards for all the directors and company secretary
• Certificates of good conduct for all the directors
• Proof of payment of fees for application of the licence.
• A copy of the interest rates according to the categories of loans products offered.
• Memorandum and articles of association.(certified copy 1)
• TIN Number
• Organisation Structure

Office Locations & Contacts

Uganda Microfinance Regulatory Authority - HEAD OFFICE,
Physical Address: Rwenzori Towers, Block B
Ground Floor, Plot 6 Nakasero Road
Postal Address: P.O Box 11545
Kampala , Uganda
Call: 256 417 799 700
Toll - free: 0800 111 449
Email Us: [email protected] / [email protected]
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 person is eligible to make an application to run a Micro Finance Bank in Uganda.
• This application allows a person to operate a Micro Finance Bank in Uganda.
• In Uganda no person shall, operate a Micro Finance Bank in Uganda unless authorized by the Central Bank of Uganda.

Fees

• Certification fees: 20,000Ugshs.
• Licence Application Microfinance: 1,000,000 Ugshs Non refundable
• Annual License Fee: 2,000,000 Ugshs
• Inspection and registration of additional places 300,000Ugshs.
• Application for a search of the register 25,000Ugshs.

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

Validity

• The validity period is one year.
• A licence issued under this section shall, unless earlier revoked, expire on the 31st December next following the date of issue:

Documents to Use

Application Form

Sample Documents

Please attach sample completed documents that would help other people.

Processing Time

The processing time is 90 days.

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 a license, please submit the duly completed form, to the 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 a license.
• All information provided shall be treated as confidential.
• A company or non-government organisation shall not carry out the business of financial services as a Non Deposit Taking Microfinance Institution without a license issued by the Authority.

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

• This license allows the holders to operate a Micro Finance Bank in Uganda.
• A person who operates a Micro Finance Bank without a valid license commits an offence and shall, on conviction be liable to a fine not exceeding five hundred thousand shillings, or to imprisonment for term not exceeding three years, or to both.

Information which might help

• The Micro Finance Bank shall be body corporate with perpetual succession and a common seal, with power to acquire, own, possess and dispose of property, to contract, and to sue and to be sued in its own name.
• Why was Uganda Micro-finance Regulatory Authority Established?
  • Promoting legitimacy and building the confidence of members, customers and investors in the Microfinance Facilitating the microfinance industry to promote social and economic development Business.
  • Establishing prudential standards for microfinance institutions in order to safeguard the deposits of members, prevent financial system instability of the funds of depositors and ensure stability of the financial system
  • Applying non-prudential standards to tier 4 microfinance institutions by—
    • Defining sources of capital;
    • Establishing default protection mechanisms;
    • Enforcing compliance with generally accepted accounting practices; and
    • Instituting mechanisms for the prevention of fraud and financial crimes
    • Providing a framework for the management and control of money lending

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 1
• External Link 2
• External Link 3

Others

• In May 2016, the Tier IV Microfinance Institutions and Money lenders Act was passed by the Parliament to effectively govern the spectrum of Tier IV financial institutions and Money Lenders with the objective of protecting the savings the depositors, limiting predatory lending and unethical practices, and building confidence in the system to promote financial inclusion.
• UMRA is expected to promote a sound and sustainable non-bank financial institution’s sector (savings and credit cooperatives, village saving and loan associations, non-deposit taking microfinance institutions and moneylenders) to enhance financial inclusion, financial stability, and financial consumer protection among the clients.
• UMRA also seeks to protect interests of members and beneficiaries of tier 4 microfinance institutions including the promotion of transparency and accountability by applying both prudential and non-prudential standards, promote stability and integrity of the financial sector through ensuring stability and security of Tier 4 microfinance institutions and other functions.