Guidance Note to Micro Lenders and Directive to Other Non-Bank Lenders on Early Settlement

The Non-Bank Financial Institutions Regulatory Authority (“NBFIRA”) issued a Guidance Note (NBFIRA/RS/LAD/GN01) to micro lenders and Directive (NBFIRA/RS/LAD/DIR01) to other non-bank lenders on early settlement penalty on May 13, 2024 with an effective date of July 1, 2024. The effective date was extended to January 1, 2025, through a circular dated June 28, 2024.

The Regulatory Authority wishes to inform non-bank lenders that the Guidance Note (NBFIRA/RS/LAD/GN01) and Directive (NBFIRA/RS/LAD/DIR01) have been revised accordingly and the early settlement penalty amount should not be more than 60 days’ interest (instead of the 30 days previously prescribed) on the outstanding principal amount and should only be charged where a repayment was done without prior notice of 30 calendar days’ or shorter as may be prescribed by the non-bank lender. All other terms of the Guidance Note and Directive remain the same.

Non-Bank Lenders are urged to ensure that their operations are continually based on best practices as the Guidance Note and Directive are subject to change as and when new developments are introduced in the sector.

The Guidance Note and Directive have been attached and are effective January 1, 2025.

Oduetse A. Motshidisi
CHIEF EXECUTIVE OFFICER

Attachements;

  1. Early Settlement Guidance Note - Microlenders
  2. Early Settlement Directive Pawnshops Finance and Leasing Companies