Central Bank introduces new requirements for licensing financial institutions

27 Dec 2018

On 27 December 2018, the Central Bank introduces new requirements for licensing financial institutions. The Existing licensing regulation for banks, introduced in 2008, categorizes banks into commercial banks, with a minimum paid-up capital of Rwf5 Billion, Microfinance Banks, with a minimum paid-up capital of Rwf1.5 Billion and Development Banks with a minimum paid-up capital of Rwf3 Billion. With Regard to the Insurance sector, the licensing regulation introduced in 2009 set the minimum capital for both Life and General Insurers at a minimum capital of Rwf1 Billion. The new paid-up capital for Commercial Banks is Rwf20 Billion and Rwf50 Billion for Development Banks. The Paid-up Capital for the new categories of cooperative and Mortgage Banks is set at Rwf10 Billion. The new minimum paid-up capital for commercial banks is Rwf3 Billion and Rwf2 Billion for Life Insurance. Health Maintenance Organizations (HMOs) shall have a minimum paid-up capital of Rwf500 Million while Re-insurers shall have a minimum paid-up capital of Rwf5 Billion. Banks have a 5 year transition period to build up the capital with a target to reach Rwf15 Billion in 3 years and the full Rwf20 Billion by year 5. General Insurers have 3 years and Life Insurers, 2 years to meet the required paid-up capital. The transition period will start running after the publication of the regulations in the Official Gazette of the Republic of Rwanda. The new entrants will be required to comply with the new paid-up capital requirements at the onset. The new rules entered into force on 7 January 2019.

Nature of measure:

• Treatment and operation

Type:

• Entry and establishment (Other)

Industry:

• Services (Financial and insurance activities)

Sources:

• Official Gazette no. 01 of 07/01/2019, REGULATION N° 2310/2018 - 00013[ 614 ] OF 27/12/2018 OF THE NATIONAL BANK OF RWANDA ON LICENSING CONDITIONS OF BANKS, https://www.bnr.rw/fileadmin/user_upload/REGULATION_ON_LICENSING_CONDITIONS_OF_BANKS_.pdf, 07 Jan 2019
• Official Gazette no. 01 of 07/01/2019, REGULATION N° 2310/2018 - 00014[ 614] OF 27/12/2018 OF THE NATIONAL BANK OF RWANDA ON LICENSING CONDITIONS FOR INSURERS AND REINSURERS, https://www.bnr.rw/fileadmin/user_upload/REGULATION_ON_LICENSING_CONDITIONS_FOR_INSURERS_AND_REINSURERS_.pdf, 07 Jan 2019
• Rwanda News Agency, Central Bank introduces new requirements for licensing financial institutions, https://rnanews.com/2018/12/21/central-bank-introduces-new-changes-in-licensing-financial-institutions/, 21 Dec 2018