BANK OF THE REPUBLIC OF BURUNDI

THE GOVERNOR

CIRCULAR NO. 17/2018 ON THE CREDIT BAN FOR DEFAULTING CLIENTS WITHIN THE BANKING SECTOR ISSUED PURSUANT TO LAW NO. 1/17 OF AUGUST 22, 2017 GOVERNING BANKING ACTIVITIES

In view of Law No. 1/34 of December 2, 2008 establishing the Statutes of the Bank of the Republic of Burundi, particularly Articles 7 (paragraphs 4 and 6) and 8;

In view of Law No. 1/17 of August 22, 2017 governing banking activities, particularly Articles 49 and 50;

In view of Circular No. 12/2018 on risk classification and the establishment of provisions by credit institutions;

Having reviewed Circular No. 17/2013 on the credit ban for defaulting clients within the banking sector;

The Bank of the Republic of Burundi, hereinafter referred to as the "Central Bank", hereby issues:

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Article 1: Object

This circular aims to protect the banking sector against financial misconduct by defaulting clients.

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Article 2: Definition

For the purposes of this circular, a defaulting client means any person who has benefited from financial assistance of any kind, including signature loans, and who is in payment default for 180 days or more.

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Article 3: Prohibition

Credit institutions are prohibited from granting any financial assistance, including signature loans, to defaulting clients of another active or bankrupt credit institution, except for clients guaranteed by the State.

Before granting credit, a credit institution must refer to the comprehensive list of defaulting clients within the banking and microfinance sectors, which is regularly transmitted to it by the Central Bank.

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Article 4: Support for Defaulting Clients

The credit institution with which the client failed to meet its obligations may continue to support it to facilitate repayment, notably by granting another loan or through credit rescheduling or restructuring as provided in Circular No. 12/2018 on risk classification and the establishment of provisions by credit institutions.

Another credit institution that, in good faith, agrees to support the defaulting client is required to buy out, or formally commit to guaranteeing the repayment of all obligations of that client towards the banking sector, provided these loans are covered by solid guarantees.

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Article 5: Limit on Rescheduling or Restructuring of a Defaulting Client

A loan may be rescheduled or restructured at most three times in accordance with Circular No. 12/2018. If, upon completion of the third rescheduling or restructuring, the client becomes defaulting again, they may no longer receive credit from any credit institution other than the one with which they are in default.

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Article 6: Related Persons

Credit institutions must ensure that related persons, as defined by Law No. 1/17 of August 22, 2017 governing banking activities, are treated as a single person.

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Article 7: Declaration to the Central Bank

For centralization purposes, credit institutions must transmit to the Central Bank, no later than the tenth day of the following month, the list of defaulting clients according to the template in the annex.

To avoid confusion between natural persons with the same first and last names, credit institutions must declare sufficiently identified persons on the list of defaulting clients.

Failure to declare a defaulting client or the improper declaration of a client on the list exposes the credit institution to sanctions provided for in the circular regarding the sanction matrix.

The list transmitted to the Central Bank must include at least information regarding names and first names, place and date of birth, National Identity Card (CNI) or passport number, place and date of issue, as well as the tax identification number (NIF).

The Central Bank reserves the right to return to the concerned credit institution, for adjustment, lists of defaulting clients containing persons who are not sufficiently identified.

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Article 8: Entry into Force

This circular replaces Circular No. 17/2013 of September 16, 2013, and enters into force on the day of its publication on the Central Bank's website and in the Official Gazette of Burundi.

Issued in Bujumbura, on August 17, 2018

Jean CIZA
Governor.

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Annex to Circular No. 17/2018

Credit Institution:
Document: Credit Beneficiary Who Became Defaulting
Period:

Client's Name(s) and First Name(s) or Company Name	Date of Birth or Establishment	ID Number (CNI or Passport)	Date and Place of Issue (CNI or Passport)	Commercial Register No.	Tax Identification Number (NIF)	Profession	Credit Outstanding (in thousands of BIF)	Number of Days in Payment Default (180 days or more)

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