Because of Rwandan history and the 1994 Genocide against the Tutsi, Rwandan families are scattered and that criteria will be an impediment not only to the client but also to the banking sector

Banks are likely to incur big loses if they fail to realise their securities after the new Land and Concession bills are gazetted.

In the Article 22 law no 22/99 of 12/11/99 and Article 34 to 35 law no 08/5 of 14/07/05 which stipulate that in order to access a bank loan some one must have signatories of all family members and the minors should be represented.

The problem appeared after banks started to recover their money through the selling of securities one of the family members would object the auction.

"We have registered many cases where one person in the family members opposes the selling of collateral claiming that he/she was not informed about the loan and did not sign thus delaying the realisation of the security”, Jean Marie Gacandaga Head of risk management in the Bank of Kigali said recently.

Apart from realising collaterals, the other concern in the law is the criteria to have all family members signatures. Because of Rwandan history and the 1994 Genocide against the Tutsi, Rwandan families are scattered and that criteria will be an impediment not only to the client but also to the banking sector.

Common cases are whereby children are not in the country especially in different countries for studies, and where the husband or the wife resides in different countries for official duties.

"Our business and the purpose of banks is to lend money, if these laws are not revised we are even likely to close because it’s a big threat,” Jean Marie Gacandaga said.

Simon Ntirampeba legal advisor  in Bank of Kigali, said the issue will be raised in the upcoming General Assembly of Banks and later to the Minister of Finance and Economic Planning for quick response.

Banks suggest that in order to access a bank loan only two people would be enough especially spouses unlike where all children and representatives of minors should have signatures on the consent form.  

According to Hannington Namara of Commercial Banks of Rwanda (BCR) it is a general problem to all banks in the country. However there has not been particular case in BCR where one of the family members protested the realisation of the guarantee.

”When collaterals become Non-performing loans, judicial measures will be taken because they were given before the laws were drafted,” Namara said.

"Our clients are getting used to the change because it’s not us but the law. Currently we request them have a consent form which is signed by all family members,” he added.

The law comes when the Government of Rwanda is undergoing through financial reform and encouraging the saving culture especially to low income earners.

The current figures indicate that only 22 percent of the population access bank services including loans and the law might reverse the trend.

When contacted the Governor of the Central Bank Francois Kanimba referred the reporter to the Ministry of Land and Natural Resources.

According to Vincent Karega, State Minister in charge of Environment and Mining, the law will rather boost the sector (banking) because it will be used as collateral for many farmers. He said farmers will use their land titles to have access to small loans for improved seeds, fertilisers.

The state-managed land law which was voted early last year is part of the efforts to national land tenure reform.

The state will play the role of a regulator after starting to implement and currently working on land titles.

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