Circular No. 14/M/26 on the Registration and Operation of Community Financial Groups, Their Management Committees, and Internal Savings and Credit Group Supervisors under Microfinance Regulation No. 001/2018

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CENTRAL BANK OF THE REPUBLIC OF BURUNDI

CIRCULAR No. 14/M/26 on the Registration and Operation of Community Financial Groups, Their Management Committees, and Internal Savings and Credit Group Supervisors under Microfinance Regulation No. 001/2018

Having regard to Law No. 1/34 of 2 December 2008 establishing the Statutes of the Central Bank of the Republic of Burundi;

Having regard to Law No. 1/23 of 30 December 2011 establishing the organic framework for pre-cooperative groups;

Having regard to Law No. 1/12 of 28 June 2017 governing cooperative societies;

Having regard to Law No. 1/17 of 22 August 2017 governing banking activities;

Having regard to Law No. 1/07 of 11 May 2018 establishing the national payment system;

Having regard to Law No. 1/08 of 27 March 2025 amending Law No. 1/02 of 4 February 2008 on combating money laundering and terrorist financing;

Having regard to Regulation No. 001/2017 on payment services and payment institution activities;

Having regard to Regulation No. 001/2018 on microfinance activities in Burundi;

Having regard to Circular No. 11/M/19 on the matrix of sanctions applicable to microfinance institutions, umbrella structures, and financial bodies issued pursuant to Regulation No. 001/2018 on microfinance activities;

Having regard to Circular No. 01/M/23 revising Circular No. 01/M/18 on the approval of microfinance institutions, umbrella structures, and financial bodies, as well as the registration of Community Financial Groups, issued pursuant to Regulation No. 001/2018 on microfinance activities;

Having reviewed Circular No. 14/M/23 on the registration and operation of Community Financial Groups and the members of their Management Committees, issued pursuant to Regulation No. 001/2018 on microfinance activities;

The Central Bank hereby issues this Circular.

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TITLE I: GENERAL PROVISIONS

Article 1: Purpose

This circular aims to revise Circular No. 14/M/23 on the registration and operation of Community Financial Groups and the members of their Management Committees, issued pursuant to Regulation No. 001/2018 on microfinance activities.

Article 2: Scope of Application

This circular applies to fourth-category microfinance institutions known as "Community Financial Groups", the members of their Management Committees, and the Initiating, Promoting, and Supervising Bodies of Internal Savings and Credit Groups.

Article 3: Definitions

For the purposes of this circular, the following terms shall mean:

1. Professional Association: a non-profit association bringing together all Community Financial Groups, tasked, among other things, with promoting and defending the collective interests of its members;

2. Central Bank: Central Bank of the Republic of Burundi;

3. Fourth-category microfinance institutions: Community Financial Groups of the cooperative society, pre-cooperative group, or village savings and credit association types that collect member contributions and grant loans according to the agreed approach;

4. Internal Savings and Credit Group (ISCG): groups of the village savings and credit association type, such as Village Community Banks (VICOBA), Savings and Internal Lending Communities (SILC), etc., that collect member contributions and grant loans according to the agreed approach;

5. Community Financial Group (CFG): Community Financial Groups of the cooperative society or pre-cooperative group type that collect member contributions and grant loans according to the agreed approach;

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6. Initiating, Promoting, and Supervising Body of Internal Savings and Credit Groups: any governmental or non-governmental organization, support or assistance project, non-profit association, religious organization, or any other similar entity that:
   i. defines an implementation strategy for Internal Savings and Credit Groups, creates and supervises them;
   ii. provides financial education to Internal Savings and Credit Groups and communicates their data to the Central Bank for processing.

7. Platform of Initiating, Promoting, and Supervising Bodies of Internal Savings and Credit Groups: an entity that brings together all supervising, initiating, or promoting bodies of Internal Savings and Credit Groups, with the mission, among other things, to promote and defend the collective interests of its members;

8. Institutional Transformation of a Community Financial Group: an operation by which a CFG changes its registered category by decision of its members and with the approval of the Central Bank, to become a microfinance institution of either the first or third category.

TITLE II: PROVISIONS RELATING TO COMMUNITY FINANCIAL GROUPS

CHAPTER I: REGISTRATION OF A CFG AND MEMBERS OF THE MANAGEMENT COMMITTEE AND SUPERVISORY BOARD

Article 4: Obligation to Register a Community Financial Group

Every CFG is required to register with the Central Bank according to the procedures outlined in Articles 5 and 6 of this circular.

Article 5: Registration Conditions for a Community Financial Group

To register with the Central Bank, every CFG must have:

1. A defined constitutional purpose;
2. A precise workplace recognized by the local administration;
3. A minimum of thirty (30) members and a maximum of three hundred (300) members;
4. A corporate name;
5. A minimum capital of 50,000,000 BIF, composed of fully paid-up social shares distributed equitably. This capital will serve, on the one hand, to purchase necessary equipment prior to registration authorization, and on the other hand, as basic working capital;
6. A Management Committee;
7. A Supervisory Board.

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Article 6: Constitutive Documents for the Registration Application of a Community Financial Group

To obtain registration, the Representative of the CFG in formation submits to the Governor of the Central Bank a file comprising the following documents:

1. A registration request letter addressed to the Governor of the Central Bank;
2. A Tax Identification Number and a Commercial Registry for the group seeking registration;
3. A certificate of recognition issued by the zonal administration authorities within its jurisdiction;
4. A notarized minutes of the Constitutive General Assembly;
5. A notarized list of all group members, including telephone address, National Identity Card number, paid-up social shares, and signature of each member;
6. Notarized Statutes and Internal Rules of Procedure;
7. Proof of payments made for the release of the minimum capital;
8. A payment receipt for the file analysis fees determined by the Central Bank;

The Central Bank reserves the right to request any additional information it deems useful to base its decision.

Article 7: Issuance of Registration Number

The registration of a CFG is formalized by the issuance of a registration number following an ad hoc analysis. The Central Bank will rule on the registration application within a period not exceeding three months from the receipt of the complete file.

The granting of the registration number is conditional upon the presentation of a payment receipt for the associated fees.

The registration number must be displayed at the group's workplace in a location accessible and visible to the public.

Article 8: Documents Required for the Registration of Management Committee and Supervisory Board Members of a Community Financial Group

For the registration of Management Committee and Supervisory Board members, the concerned CFG submits to the Governor of the Central Bank a file comprising the following documents:

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1. A registration request letter addressed to the Governor of the Central Bank;
2. A notarized minutes of the General Assembly meeting designating the members of the Management Committee and the Supervisory Board;
3. A curriculum vitae for each designated member;
4. A copy of the National Identity Card or passport for each designated member;
5. An original extract of the criminal record for each designated member, issued no more than three (3) months prior to the application date;
6. A certified true copy of a Bachelor's or License degree at minimum for the President and Vice-President of the Management Committee, and at minimum A2 or post-fundamental level for the Treasurer and Secretary of the Management Committee;
7. A certified true copy of a License or Bachelor's degree at minimum for the President of the Supervisory Board, and at minimum A2 or post-fundamental level for other members.

The Central Bank reserves the right to request any additional information it deems useful to base its decision.

Article 9: Change of Workplace for a Community Financial Group

A CFG may under no circumstances relocate its workplace, under its initial registration number, outside the administrative perimeter in which it was recognized upon registration. If applicable, it forfeits its old registration number and is required to submit a new registration application to the Central Bank to obtain a new registration number following the new administrative recognition.

In all cases, the request to change the workplace must preserve the rights of its members.

Article 10: Change of Initial Registration Conditions for a Community Financial Group

Any modification of the information and elements provided during the CFG registration application is subject, in advance, to the authorization of the Central Bank. This information and elements notably relate to changes in:

1. The corporate name;
2. The composition of the Management Committee and Supervisory Board members;
3. The workplace.

The Central Bank may request, for authorization purposes, any information it deems useful.

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Article 11: Withdrawal of Registration

The Central Bank withdraws the registration number of a CFG:

1. At the request of the concerned group;
2. Ex officio when:
   i. the information provided to the Central Bank during the registration application proves false or misleading;
   ii. the group ceases its activities for a period of six (6) months;
   iii. the group has not used its registration for a period of twelve (12) months;
   iv. the group carries out the operations mentioned in Article 18 of this circular and/or in cases of serious or repeated breaches of legal and regulatory provisions;
   v. the group has not paid annual monitoring fees for two (02) years;
   vi. the relocation of the workplace was carried out without prior authorization from the Central Bank;
   vii. the group requests institutional transformation and is approved under another category of microfinance institution, namely a first-category or third-category microfinance institution;
   viii. the CFG does not comply with the provisions of Article 5, paragraph 3 of this circular.
3. When the group's net assets do not exceed its payable liabilities to its members by an amount at least equal to the minimum capital.

The Central Bank withdraws the registration of one or more members of the Management Committee and/or Supervisory Board when they appear on the list of defaulting debtors.

CHAPTER II: OPERATION, CONTROL, AND INSTITUTIONAL TRANSFORMATION OF A CFG

SECTION 1: OPERATION AND CONTROL OF A CFG

Article 12: Management of a Community Financial Group

The daily management of a CFG is entrusted to the Management Committee, which ensures the proper functioning of said group within the limits set by the Statutes, Internal Rules of Procedure, and Central Bank directives.

Article 13: Control by the Supervisory Board

The activities of a CFG are controlled by the Supervisory Board.

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The Supervisory Board is responsible for controlling the management and regularity of the CFG's operations.

Article 14: Composition of the Management Committee and Supervisory Board of the Community Financial Group

The Management Committee is composed of a President, a Vice-President, a Treasurer, and a Secretary.

The Supervisory Board consists of three (3) members, including a President and a Secretary.

Members of the Management Committee and Supervisory Board are elected by the General Assembly for a term of three years, renewable.

Members of the Management Committee and Supervisory Board must not have family ties with each other.

Article 15: Duties of Management Committee Members of a Community Financial Group

The President of the Management Committee performs, on behalf of the Group, all management and administrative acts in accordance with the provisions of applicable legal and regulatory texts.

In the exercise of their mandate, the President of the Management Committee is strictly bound to respect the decisions of the General Assembly and the Central Bank.

The President of the Management Committee is required to transmit, to the Central Bank, the report on regulatory financial and non-financial data.

The Vice-President assists the President in their duties and replaces them in case of absence for a period not exceeding three months.

The Treasurer and Secretary carry out the activities provided for by the Group's Statutes and Internal Rules of Procedure.

Article 16: Duties of Supervisory Board Members of a Community Financial Group

The Supervisory Board is responsible for controlling the management and regularity of the CFG's operations. To this end, it is authorized to conduct any verification or inspection of the group's accounts, books, and operations. In the exercise of its mission, it has access to any document and information it deems useful. It reports its activities to the General Assembly.

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Article 17: Authorized Operations

Community Financial Groups are authorized solely to collect contributions from their members and grant them loans according to the approach agreed upon among them.

However, the loan granted to a member must not exceed 5,000,000 BIF and must be extended over a period not exceeding 12 months.

Without prejudice to the provisions of the preceding paragraphs of this article, the Management Committee is responsible for determining the terms for granting loans to group members.

Every CFG is required to domiciliate its members' contributions in an account opened at a bank or a first- or third-category microfinance institution.

Any withdrawal from the CFG's account requires the joint signature of two persons; either the President and Treasurer, or the Vice-President and Treasurer. The latter are responsible for unpaid debts for amounts exceeding the regulatory threshold.

Article 18: Prohibited Operations

Community Financial Groups are prohibited from carrying out the following operations:

1. Collecting public deposits;
2. Granting loans to the public;
3. Opening accounts;
4. Domiciling salaries;
5. Opening branches, counters, or any other form of service point;
6. Remunerating contributions;
7. Storing collected funds within the CFG premises;
8. Foreign exchange operations;
9. Sourcing foreign currency;
10. Contracting loans.

The Management Committee and Supervisory Board are jointly liable for fraudulent operations carried out within the CFG.

Article 19: Transmission of Reports

Every CFG must transmit, via the BSA application, to the Central Bank, a semi-annual financial report no later than 15 July and an annual financial report no later than 31 January of the year following the closed fiscal year.

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The Supervisory Board is required to transmit its quarterly report to the Central Bank no later than the 15th day following the end of the quarter. The Management Committee must transmit to the Central Bank, no later than the 15th day following the end of each quarter, via the BSA application, the report on contributions, loans granted, and unpaid loans.

SECTION 2: INSTITUTIONAL TRANSFORMATION OF COMMUNITY FINANCIAL GROUPS

Article 20: Institutional Transformation

Any CFG that has operated for at least 5 years with contributions totaling an amount equivalent to the minimum capital required for the third or first category of microfinance institutions must submit a request for its transformation and obtain approval under one of these categories.

The transformation of a CFG automatically entails its voluntary liquidation and the designation of new management bodies corresponding to the new category.

Article 21: Procedures for Institutional Transformation

Any operation related to the institutional transformation of a CFG requires prior authorization from the Central Bank.

Any CFG wishing to transform into another category of microfinance institution must submit a report demonstrating that all payable liabilities, notably contributions, have been fully returned and that the remaining assets have been distributed among the members.

Said report, approved by the General Assembly and notarized, must be transmitted to the Central Bank of the Republic of Burundi.

CHAPTER III: ON THE PROFESSIONAL ASSOCIATION OF COMMUNITY FINANCIAL GROUPS

Article 22: Membership in the Professional Association

CFGs may, after their registration, join the professional association. They are required to respect the constitutive texts governing the professional association.

Article 23: Mission of a Professional Association

The professional association of CFGs pursues, among other things, the following missions:

1. To promote and defend the interests of its members;
2. To foster cooperation among its members;
3. To contribute to the training of its members;

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4. To inform the public about its activities or initiatives taken or undertaken within the framework of its mission;
5. To encourage its members to respect ethics, the regulations applicable to Community Financial Groups, and consumer protection procedures for financial services.

Article 24: Subscription to the Code of Ethics

Every CFG, as a member of the professional association, is required to subscribe to the Code of Ethics developed by the latter.

The Code of Ethics is a collection of principles that member CFGs must respect in order to better achieve their social and economic missions, in accordance with current regulations and generally recognized rules in the sector.

Article 25: Composition and Operation of the Professional Association

The composition and operation of the professional association are fixed by its Statutes and Internal Rules of Procedure.

The Statutes of the professional association, the Internal Rules of Procedure, the code of ethics, and all subsequent amendments, as well as its executives, are submitted for approval to the Central Bank.

The professional association establishes an annual activity program and communicates it to the Central Bank no later than 31 January of the concerned year.

TITLE III: PROVISIONS RELATING TO INITIATING AND SUPERVISING BODIES AND INTERNAL SAVINGS AND CREDIT GROUPS (ISCGs)

CHAPTER I: REGISTRATION, OPERATION OF INITIATING OR PROMOTING AND SUPERVISING BODIES OF INTERNAL SAVINGS AND CREDIT GROUPS

Article 26: Registration Conditions for Initiating, Promoting, and Supervising Bodies of Internal Savings and Credit Groups

Before commencing the activity of initiating or supervising ISCGs, any organization planning to create and supervise ISCGs must register with the Central Bank. The registration application file includes the following elements and information:

1. The registration request letter as an initiating and supervising body of ISCGs addressed to the Governor of the Central Bank;

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2. The corporate name of the organization;
3. The address of the organization's registered office;
4. The address where the activity is exercised on behalf of the organization if different from the registered office;
5. Identification of the persons responsible for the organization;
6. The main activity of the organization;
7. A copy of the convention or agreement signed with the Government of Burundi authorizing it to establish itself in Burundi;
8. The Statutes and standard Internal Rules of Procedure governing ISCGs under its supervision;
9. A document describing the duration of intervention, implementation plans for promoting savings and credit groups, as well as support measures for the autonomy of ISCGs under its supervision;
10. All information regarding the qualifications, integrity, and experience of the executives of Initiating, Promoting, and Supervising Bodies of internal savings and credit groups;
11. Any other document deemed useful by the Central Bank.

The Central Bank issues a registration number to the organization within a period of three months from the receipt of the complete registration application file, provided the conditions are met.

Article 27: Obligation to Inform Local Authorities

Initiating, Promoting, and Supervising Bodies of Internal Savings and Credit Groups are required to:

1. Inform local authorities about the commencement and cessation of ISCG supervision activities;
2. Regularly inform local authorities about achievements and results during their intervention period;
3. Present to local authorities the managers of interventions in ISCGs under their supervision.

Article 28: Transmission of Reports

Initiating, Promoting, and Supervising Bodies of ISCGs are required to prepare and transmit to the Central Bank their consolidated semi-annual activity reports no later than 15 July and annual reports no later than 31 January of the year following the closed fiscal year, according to the reporting format in the annex to this Circular.

The activity reports of ISCGs are also transmitted by the supervising or initiating bodies via an application of the Information System and