Registered private money lenders will now be able to charge an interest rate of up to 18% per annum to borrowers according to the new private money lending rules. The old rate was 15% per annum. The Royal Monetary Authority (RMA) recently revised the 2021 rules and regulations.
According to the revised rules, a person wishing to lend money has to obtain a registration certificate from the RMA after paying a fee of Nu 2,500. The individual will then have to apply for a trade license from the Department of Trade before being licensed by the RMA.
Registered licence holders can lend up to Nu 500,000 to a single borrower.
The private lenders will not be allowed to borrow money from financial service providers including individuals.
Meanwhile, almost all monetary cases in the courts involve people lending money without a licence according to the Supreme Court.
If registrered private money lenders are found making fraudulent agreements in violation of the new rules, the person will either be penalized or the registration certificate will be cancelled.
Likewise, if an unregistered person lends money, the person will be fined minimum wage between 15 to 30 years and will be liable for misdemeanor.
People can lodge written complaints to the RMA’s Consumer protection Unit regarding individuals carrying out private money lending business in contravention to the rules and regulations.
Edited by Kipchu