CHAPTER 46:08
MICROFINANCE

ARRANGEMENT OF SECTIONS

   SECTION

PART I
PRELIMINARY

   1.   Short title

   2.   Interpretation

   3.   Application

   4.   Exemptions

PART II
REGISTRATION AND LICENSING

Division I
Microfinance Service Providers

   5.   Prohibition against carrying on microfinance business without certificate or licence

   6.   Registration or licensing under the Financial Services Act

   7.   Products and services under other laws

   8.   Issue of certificate, etc.

   9.   Business to be conducted in approved premises

   10.   Restriction on transfer, etc. of certificate, etc.

   11.   Expiry of a certificate, etc.

   12.   Suspension or revocation of certificate, etc.

   13.   Registered, licensed or approved person, to honour obligations

Division II
Microfinance Institutions

   14.   Primary business of microfinance institution

   15.   Microfinance institution may offer services through an agent

   16.   Prudential regulation of non-deposit-taking microfinance institution

   17.   Microfinance institution not limited by shares to prioritize creditors

Division III
Deposit-taking Microfinance Institutions

   18.   Deposit-taking microfinance institutions to be limited by shares

   19.   Inspections of premises

   20.   Deposit-taking microfinance institutions to operate in designated places

PART III
MICROFINANCE REGISTER

   21.   Register

   22.   Inspection of Register

   23.   Evidence in Register

PART IV
GOVERNANCE OF A MICROFINANCE INSTITUTION

Division I
Microcredit Agencies

   24.   Minimum governance standards for microcredit agencies

Division II
Microfinance Institutions

   25.   Board of a microfinance institution

   26.   Actions requiring prior approval

   27.   Management of a microfinance institution

   28.   Disqualification from appointment

   29.   Internal control systems

   30.   Inconsistency with other laws

Division III
Deposit-taking Microfinance Institutions

   31.   Ownership

   32.   Control of a deposit-taking microfinance institution

PART V
MICROFINANCE OPERATIONS

Division I
Microfinance Service Providers

   33.   Conduct of business

   34.   Disclosure of terms of credit and savings products

Division II
Microfinance Institutions

   35.   Display of information

   36.   Minimum and other capital requirements

   37.   Additional directives for microfinance institutions

   38.   Insider lending

   39.   Limits on loans

Division III
Other Licensed Financial Institutions

   40.   Separation of operations and portfolios

   41.   Divisions I and II to apply to other licensed financial institutions

PART VI
ACCOUNTS AND AUDIT

Division I
Microfinance Service Providers

   42.   Financial year

   43.   Accounts

Division II
Microfinance Institutions

   44.   Auditors of a microfinance institution

PART VII
REGULATION AND SUPERVISION OF MICROFINANCE INSTITUTIONS

Division I
Microcredit Agencies

   45.   Information disclosure by microcredit agencies

Division II
Licensed Microfinance Institutions

   46.   Reporting requirements for microfinance institutions

Division III
Other Licensed Financial Institutions

   47.   Section 40 to apply to other licensed financial institutions

PART VIII
REMEDIAL MEASURES AND WINDING–UP OF MICROFINANCE SERVICE PROVIDERS

Division I
Microfinance Service Providers

   48.   Remedial measures

Division II
Non-deposit-taking Microfinance Institutions and Microcredit Agencies

   49.   Winding up of non-deposit-taking microfinance institution or microcredit agency

Division III
Prudentially Regulated Microfinance Institutions

   50.   Winding up of prudentially regulated microfinance institutions

PART IX
MISCELLANEOUS PROVISIONS

   51.   False documents

   52.   Confidentiality

   53.   Money laundering transactions

   54.   Obstruction of the Registrar, etc.

   55.   General offences and penalties

   56.   Regulations

   57.   Directives and guidelines

PART X
TRANSITIONAL PROVISIONS

   58.   Compliance by existing microfinance service providers

21 of 2010
G.N. 15/2010

An Act to provide for the regulation and supervision of microfinance services and to make provision for matters connected therewith or incidental thereto

[1ST OCTOBER 2010]

PART I
PRELIMINARY

1.   Short title

   This Act may be cited as the Microfinance Act.

2.   Interpretation

   (1) In this Act, unless the context otherwise requires—

   “bank” has the meaning ascribed to it in the Banking Act;

   “branchless service” means any microfinance service, as defined in this Act, which is offered by a microfinance service provider or an agent on behalf of a licensed financial institution, where the licensed institution is authorized to provide the service and is wholly responsible for its lawful provision to the same extent as if offering the service directly;

   “capital” includes paid up capital and unimpaired reserves;

   “certificate” means a certificate of registration issued under this Act;

   “company” has the meaning ascribed to it in the Companies Act;

   “compulsory savings” means a sum of money which is paid as security, as a partial guarantee or as a precondition for a loan granted or promised at a future date to be granted to the person making the payment;

   de facto control of a microfinance institution” means direct or indirect influence that results in the person having predominant decision-making power over the business or financial operations of the microfinance institution and includes powers exercisable over another microfinance institution by virtue of such influence;

   de jure control of a microfinance institution” means beneficial ownership of more than 50% of any class of the issued voting shares of a microfinance institution;

   “deposit” means a sum of money received or paid on terms under which it will be repaid, with or without interest or a premium, and on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it except that the following shall not qualify as deposits for the purposes of this Act—

   (a)   any sum of money which is paid by way of advance or part payment under a contract for the sale, hire or other provision of properly or services, where the sum is repayable only if the property or services is not or are not in fact sold, hired or otherwise provided;

   (b)   a sum of money which is paid by way of security for performing a contract;

   (c)   compulsory savings, provided that any such amount is not on-lent and is immediately placed in an account at a bank or microfinance institution duly licensed to accept deposits;

   (d)   acceptance of funds placed by a body corporate or other investor, in large amounts, against the issue of shares, debentures, bonds, certificates, notes, or other instruments;

   (e)   acceptance of funds—

      (i)   by an agent for the provision of branchless services;

      (ii)   in the form of insurance premiums; or

      (iii)   for purposes of transfer or payment services,

including conversion into electronic payment media (“e-money”);

   “deposit-taking” means accepting deposits for intermediation;

   “director” means a member of the board of directors of a microfinance institution, microcredit agency or a savings and credit cooperative;

   “financially underserved customer” means a person who is economically active and does not normally have access to formal financial institutions ;

   “group guarantee” means an agreement by a group of microfinance borrowers to be held jointly or severally liable for loan repayments in order to secure credit facilities;

   “licence” means a licence issued under the Financial Services Act;

   “low-income customer” means a person who is economically active, receives annual income at or below the official poverty line for Malawi, and does not normally have access to formal financial institutions;

   “microcredit” means the provision of small loans to small or micro enterprises, low-income customers, financially underserved customers, or as determined by the Registrar, where—

   (a)   such loans are granted to a person whose income depends on his own business or economic activity;

   (b)   security for such loans may include non-traditional instruments such as group guarantees or compulsory savings;

   (c)   the borrower may be required to make frequent repayments in small amounts; and

   (d)   such loans may take the form of micro-housing or micro-leasing products designed for microfinance customers;

   “microcredit agency” means a registered provider of microcredit services;

   “microfinance institution” means a licensed provider of microfinance services, whether deposit-taking or non-deposit taking;

   “microfinance services” means the provision of financial services to small or micro enterprises, low-income customers, financially underserved customers, or as prescribed by the Registrar, including the following—

   (a)   microcredit;

   (b)   deposit-taking;

   (c)   micro-insurance;

   (d)   micro-leasing;

   (e)   transfer and payment services, including conversion into electronic payment media (e-money);

   (f)   micro-pension; or

   (g)   any other service that the Registrar may designate;

   “microfinance service provider” includes a microcredit agency, microfinance institution or any oilier licensed financial institution that has been granted approval to offer microfinance services by the Registrar;

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