The Bank of Tanzania (BoT) has issued a stern warning, indicating its intent to take decisive measures against individuals and companies conducting microfinance operations without the requisite licenses.
In a statement released on Wednesday, the BoT emphasized that those involved in illegal microfinance activities could face severe penalties. According to the statement, individuals or companies found in violation may be subject to a fine ranging from not less than 20 million Tanzanian Shillings to not more than 100 million Tanzanian Shillings. Alternatively, they could face imprisonment for a term of not less than two years but not exceeding five years, or even both.
The BoT underscored its commitment to enforcing the penalties outlined in section 16 (1) of the Microfinance Act, 2018. This move is part of the central bank's efforts to curb illegal microfinance operations and safeguard the interests of the public.
This announcement follows the recent revocation of the license of Msilikare Microfinance, located in the Shinyanga Region, for violating regulations. The BoT clarified that the decision to revoke the license was made after the microfinance institution was found to be operating contrary to legal requirements. The central bank cited serious breaches of licensing conditions and exploitative behavior towards borrowers as the reasons for the revocation.
BoT Governor, Mr. Emmanuel Tutuba, reiterated the institution's unwavering dedication to protecting the interests of microfinance users. The warning serves as a proactive measure to maintain the integrity of the microfinance sector and ensure the adherence of operators to legal and ethical standards.