Regulatory Alerts2024-10-01
Circular No. 02/M/18 on the Institutional Transformation of a Microfinance Institution or Community Financial Group, Issued Pursuant to Regulation No. 001/2018 on Microfinance Activities
The Bank of the Republic of Burundi issues Circular No. 02/M/18 to define the procedure and required documentation for transforming microfinance institutions or Community Financial Groups. The regulation categorizes these entities into four distinct types based on legal structure, deposit collection authority, and operational scope. It mandates that such transformations involve a change in legal form or category, requiring Central Bank registration rather than formal approval for village savings associations.
BANK OF THE REPUBLIC OF BURUNDI
THE DIRECTORATE
Circular No. 02/M/18 on the Institutional Transformation of a
Microfinance Institution or Community Financial Group,
Issued Pursuant to Regulation No. 001/2018 on Microfinance Activities
Article 1: Object and Scope
This circular aims to specify the procedure and required documents for
requesting the institutional transformation of a microfinance institution or
a Community Financial Group.
Article 2: Definition
For the purposes of this circular, the following terms apply:
Categorization of institutions exercising microfinance activities:
- First category, Microfinance Enterprises, Financial Cooperative Societies and other types of microfinance institutions
having the legal form of a public limited company, a public corporation or
a mixed company that carry out deposit collection and credit granting operations and provide, on an ancillary basis, other financial services to
their clients; - Second category, Financing and/or Guarantee Funds
exercising microfinance activities, Microcredit Programs
affiliated with Non-Governmental Organizations (NGOs) and
Non-Profit Associations (NPA) that grant credits but
are not authorized to collect public deposits; - Third category, Savings and Credit Cooperatives having
the legal form of a Cooperative Society, which carry out the
collection of deposits from their members and grant them
credits and provide, on an ancillary basis, other financial services; - Fourth category, Community Financial Groups
of the cooperative society type, pre-cooperative groups,
village savings associations and as of 10/8/2018
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village savings and credit associations that collect contributions from their members and grant them credits according
to the agreed approach. The exercise of activities by these associations does
not require approval but registration with the Central Bank.
Institutional transformation of a microfinance institution or Community Financial Group, an operation by which a microfinance institution changes its legal form and/or category of microfinance or Community Financial Group of the cooperative type