Parliament yesterday adopted a bill on settlements of payment and securities systems that sets up equitable instruments between financial institutions, companies and individuals.
According to the bill, the central bank has the supreme powers on any form of payment and has the overall supervisory role in any form of transaction that is in a type of payment.
Presenting the bill to the parliamentary session, the president of Parliamentary Standing Committee on Economy and Trade, Juvenal Nkusi, said the bill is meant to harmonize, regulate and manage the payment systems in the country.
“Of late, the banking sector in Rwanda has grown tremendously with different financial institutions having different types of payments systems, this why we came up with a new system that comes in form of a law so that transactions are managed well,” said Nkusi.
He added that the bill provides protection of all parties that enter into an agreement and offers with the protection and provision of securities within the agreement.
The 27-article bill indicates that no person or entity may establish or operate a system or issue payment instruments unless the party is in a possession of a license from the central bank.
It however adds that issuers of payment instruments who hold a license under the banking law are exempted from the license requirement.
The bill also gives the Central Bank powers to withdraw a license from an operator any time the bank payment issuers delay to pay for over 12 months, has ceased to issue payment instruments for a period of over one month.
Under the protection of systems, the bill indicates that the final discharge of any indebtedness between participants in the clearing shall take place through the central bank.
The criminal provision of the bill indicates that whoever violates the agreement shall be liable to a fine of ranging from Rwf 10m to Rwf 60m.
The purpose of this law is to ensure stability of the financial market, and to support the safe and efficient operation of banks and cross-border payment systems and financial instrument settlement systems.
By enacting this law it is hoped to limit the risks and disturbances to the system which could be caused by insolvency proceedings against a participant.
The law will ensure the finality of set-offs and settlements and the rights to freely sell security (pledges) granted for the purpose of participation in the system or transactions with the central bank.
These principles will also apply to cases when insolvency proceedings are brought against any participant of the system.
The parliamentary session was attended by the Governor of the Central Bank, François Kanimba and Finance Minister James Musoni.