Msilikare Microfinance loses a licence for ''exploitative' practices

The Bank of Tanzania (BoT) has taken decisive action against Msilikare Microfinance Company Limited, revoking its licence for alleged predatory practices and operating in violation of its regulations.

BOT Governor Emmanuel Tutuba announced the decision, citing serious violations of licencing conditions and exploitative behaviour towards borrowers.

"Msilikare was charging exorbitant interest rates, well beyond the limits allowed for microfinance institutions," Governor Tutuba explained.

"For instance, a Sh1 million loan incurred a staggering Sh200,000 monthly interest—far exceeding their licenced terms."

Adding to the concerns, the company inappropriately collected and held onto ATM cards belonging to teachers, their primary clientele.

This practice raises red flags, considering teachers' loan limits are capped at one-third of their salary.

In light of these transgressions, Msilikare's licence was revoked on December 15, 2023.

Efforts to reach Msirikale for comment regarding the allegations were futile as their phones and messages were unanswered.

The BoT emphasised its commitment to protecting microfinance users through strong regulatory oversight and promoting financial inclusion.

The Central Bank issued a formal statement outlining the legal basis for its action, citing sections 25(1)(b) and (e) of the Microfinance Act of 2018 and its associated regulations. It reiterated that the decision stemmed from Msilikare's demonstrably non-compliant operations.

Governor Tutuba reaffirmed the BoT's unwavering dedication to safeguarding the interests of microfinance users.

"We remain vigilant in ensuring a fair and ethical microfinance landscape that facilitates growth and empowers individuals," he stated.