A few weeks ago, the National Bank of Rwanda (NBR) reported that most of the nation’s Micro Finance Institutions (MFI’s) had not accessed the ‘credit fund’ because of poor management structures and accumulated large volumes of Non Performing Loans (NPLs).
Citing the law, the Governor warned that no financial institution would be spared if it doesn’t guarantee the norms of good governance that are demanded by the banking industry.
Days later, a top banking official at Banque Populaire du Rwanda (BPR) was arrested for mismanaging loans, prompting the central bank to recommend immediate changes in the administrative structure of the institution.
From the public standpoint the essential feature of our financial institutions and banking system, is to act as a safe repository of the funds entrusted to them by all Rwandans.
The other feature is that within limits these funds may be used by the banks for investments and that eventually the funds must be returned to the depositors.
Given this fundamental principal, the players in the banking system should not wait for NBR to police them. The players including all commercial banks and Micro-finance institutions should make it a priority to adapt to the changes as demanded and be more innovative to avoid circumstances that would eventually put their credibility at stake.