The government has again warned moneylenders against taking citizens’ national IDs as collateral for giving them loans.
Addressing journalists on Friday, the Minister for ICT and National Guidance, Dr.Chris Baryomunsi said despite several warnings, moneylenders have continued with the habit, prompting the cabinet to tighten the noose around them.
“All moneylenders, saccos, and institutions that lend out money should not be holding those IDs and a person who keeps or takes possession of an ID that belongs to another person commits an offence and is liable on conviction to a fine not exceeding 48 currency points or a conviction not exceeding three years or both,” Baryomunsi said.
The minister said the Attorney General guided that demanding and taking a national ID as collateral is unlawful.
Last year, President Museveni asked the Ministry of Finance to issue a statutory instrument in two weeks on interest paid by borrowers to moneylenders in the country.
He said the statutory instrument should operationalize section 90 of Tier 4 microfinance institutions and Money Lenders Act 2016.
Section 90 of the Tier 4 Microfinance Institutions and Moneylenders Act 2016 says a minister may in consultation with the authority by notice in the Gazette, prescribe a maximum interest rate which a money lender shall charge.
The same law says a money lender who charges an interest that is higher than the maximum interest rate prescribed by the minister commits an offence and on conviction, is liable to a fine not exceeding fifty currency points(shs1m) and the court may, in addition to the fine order that the money lenders licence be cancelled and the money lender pays the borrower any money paid in excess as a result of the interest rate charged.
The president said he had been told moneylenders had caused so much misery to families with exorbitant interest rates.
There is a growing concern by members of the public over losing their property to moneylenders.
Speaking on Friday, minister Baryomunsi said the government wont allow moneylenders to cause chaos.
“A moneylender shall not demand or accept the following as collateral according to the law, a National Identity Card, a passport, a warrant card, or other documents establishing the nationality and identity of the holder,” he said.
