Central bank urges former clients of closed MFIs to file for compensation

The National Bank of Rwanda has called on former depositors of defunct microfinance institutions (MFI’s) to register afresh and obtain remaining balances since the closure of the institutions back in 2006. In a statement signed by the central bank governor John Rwangombwa, the depositors of the defunct microfinance institutions have up to May 5, to have provided required documents. “Registrations will kick off on April 18 until May 5, at the central bank headquarters and all other branches in Huye, Musanze, Rubavu, Rusizi and Rwamagana,” reads part of the statement. So far according to the statement, depositors whose money was not refunded in previous compensation exercises shall be entitled to 25 per cent and or 75 percent of the claimed loss. Of the required particulars, the bank said that former clients of microfinance will need to have a copy of the Identification; legal personality for institutions and bank statements indicating previous balances. During the registration, the client should also provide a new bank account, in a microfinance and or a saving and credit cooperation (Saccos) and other contact details. Talking to The New Times on Wednesday, Doreen Makumi, in charge of communication at the central bank, explained that this was a second call since last year. “We decided to re-announce and allow more people enough time for registration after recording a low turnout in September last year,” she said. According to Makumi, people who had not been reimbursed will receive 75 per cent of the claimed shares while those who have been reimbursed before will get 25 percent as the remaining shares. Officials at Association of Microfinance in Rwanda welcomed the move, saying it will now bring confidence amongst clients who had lost hope in operations of micro banking institutions. “We are glad the central bank came in support of former clients in those financial institutions, this will build confidence again among clients and call for more professionalism in our institutions,” Peter Rwema, who heads the Association of Microfinance Institutions, told The New Times. Rwema further explained that since the closure, players who remained in the industry drew important lessons and worked hard to enhance professionalism. In 2006, several MFI’s around the country closed down, leaving thousands of Rwandans who had deposited billions of francs in loss. While many closed, some of their former managers were eventually arrested and charged on defrauding depositors. Previous reports indicated that many MFI’s were servicing more clients than they have resources for, unable to balance client growth with the growth in their institutional capacity. Although, the total number of affected people until now is unknown (considering those who were compensated) Government is said to have disbursed more than Rwf5 billion in payments to the affected clients. editorial@newtimes.co.rw

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Central bank urges former clients of closed MFIs to file for compensation