Tier 4 Microfinance Institutions and Money Lenders Act.

This Act provides rules for the micro-financing business in Uganda. The purpose of this Act is (I) To regulate tier 4 micro finance institutions by (a) facilitating the microfinance industry to promote social and economic development; (b) promoting legitimacy and building the confidence of members, customers and investors in the microfinance business; (c) establishing prudential standards for microfinance institutions in order to safeguard the deposits of members, prevent financial system instability of the funds of depositors and ensure stability of the financial system; and (d) applying non-prudential standards to tier 4 microfinance institutions by(i) defining sources of capital; (ii) establishing default protection mechanisms; (iii) enforcing compliance with generally accepted accounting practices; and (iv) instituting mechanisms for the prevention of fraud and financial crimes (II) To provide a regulatory framework for the management and control of money lending business. For the purposes of this Act, tier 4 micro finance institutions shall comrise (a) Savings and Credit Cooperative; (b) non deposit taking microfinance institutions; ( c) self help groups; and ( d) community based microfinance institutions.
SACCOs to be registered societies and licensed under this Act. ( 1) A SACCO shall not carry on the business of financial services unless it is a registered society (under the Cooperative Societies Act) and is licensed under this Act.