June 12, 2024


The Legal System

RDC bars money lenders from confiscating borrowers’ National IDs

RDC bars money lenders from confiscating borrowers’ National IDs

The Deputy Resident District Commissioner of Mayuge, Trevor Solomon Baleke has warned money lenders against confiscating National Identity cards, bank ATM and passports of borrowers as collateral for loans.

Baleke says it is an illegality for a money lender to confiscate such documents.

“It is violation of the laws that govern you [money lenders] and it infringes on the privacy of your customers,” he said.

Baleke made the remarks early this week while addressing Money lenders in a meeting held at Mayuge Town Council officers.

According to the 2016 Tier 4 Microfinance Institution and Money Lenders Act, Baleke says, the use of bank ATM cards, warrant books, passports and national Identity cards as collateral is prohibited.

“We are therefore giving you up to 31 December, 2022 to return to the owners all the national identity cards under your custody,” he directed.

Money lenders tried to convince the Deputy RDC that some borrowers have their national IDs as the only valuable they can present as security for loans in vain.

“And why would you lend money to a person who doesn’t meet the criteria? That is the biggest mistake you (money lenders) make and you end up having issues with wanainchi which sometimes poses a security threat in our areas,” he said.

He explained to money lenders that someone’s national identity card is a property of the Republic of Uganda and it can’t be confiscated by anyone.

The money lenders were also given data forms to be filled in which they will provide all their details to the District Security Committee.

“And please display your licenses in your offices and the interest rate at which you are lending the money.

The meeting followed a series of community engagements in which the local decried to the authorities the exorbitant interest rates charged by the money lenders, extortion and confiscation of their important documents.

The meeting was attended by the DISO, the Mayor, Mayuge Town Council executive committee and technocrats led by the town clerk.

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