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Namfisa: Don’t give bank cards, IDs to microlenders

2022-01-17  Maihapa Ndjavera

Namfisa: Don’t give bank cards, IDs to microlenders
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Namibia Financial Institution Supervisory Institutions last week cautioned the public on microlenders retaining possession of bankcards and PIN codes as well as original identification documents  (passports, driver’s licenses or IDs) of borrowers.

“The retention of bank cards and PIN codes, original identification documents, original passports and original driver’s licenses is prohibited since 1 March 2012,” said Namfisa spokesperson Victoria Muranda.

She said the aim of the prohibition was to ensure and protect microlending customers from being exploited by unscrupulous microlenders: “Consumers of financial services are the most vulnerable members of the financial system, and it is the job of the financial regulator to ensure they are treated fairly and protected against market abuse through the enforcement of the Microlending Act”. 

Muranda emphasised the retention of bank cards, PIN codes and original identification documents enables increased market conduct abuse.

According to her, the fact that lenders keep the bank cards, PIN codes or original identification documents does not necessarily imply they will use these items for anything other than collecting payments on their loans. 

However, she said, consumers on the other hand face a genuine risk of their cards being used for other reasons, and the regulator cannot wait until a loss occurs to take preventative actions. 

The Microlending Act provides for a 5% default interest charge for up to three months, after which the borrower can be handed over to debt collectors or
lawyers. 

Muranda advised, before being handed over, the borrower should be informed of the lender’s intention at least 28 days before the handover.

“Though each lender has its own method of dealing with defaulters, the provisions of the Microlending Act must be followed. Lenders cannot require borrowers to sign documents without an agreement between the two on the terms of the loan.

 Microlenders found guilty of contravening section 23(1) (f) of the Microlending Act, which is to keep or make use of bank cards or personal information such as bank cards, PIN codes, original identification documents, original passports or original driver’s license as security or for collection arrangement purposes, is liable to pay penalties calculated at 10% of the annual value of loan disbursements in the immediately preceding financial year,” explained Muranda.

She reminded the public that any person who conducts the business of a microlender without being registered in terms of the Microlending Act commits an offence and is liable on conviction to a fine not exceeding N$500 000 or to imprisonment for a period not exceeding five years, or to both such fine and such imprisonment.

According to Namfisa’s 2021 second-quarter statistics, the microlending and credit agreements department was one of the departments that recorded many complaints.

The statistics further revealed the microlending and credit agreements department received 32 complaints and solved 28 out of them for the period under review, where Namfisa recovered N$21 408.

“The cumulative number of household borrowers rose both on a quarterly basis and a yearly basis over the same period. The number of borrowers increased by 1.2% quarter-on-quarter and 10.0% year-on-year to reach 232 758 beneficiaries,” reads the report. 

- mndjavera@nepc.com.na


2022-01-17  Maihapa Ndjavera

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