EDITORIAL: It is a do-or-die challenge for banks as new regulations are unveiled

The fact that commercial banks have been given the daunting task of increasing their capital four times in the next five years is what has captured the public attention. The new guidelines expect the banks to increase their capital to Rfw20 billion from the Rwf5 billion that has been in force for the last ten years.

That should pale in comparison with development banks which will have to raise their capital to Rwf50 billion. Yes, the country is on the move and it will need to bring financial institutions to move with the same speed.

Speculation is rife as to who will meet the deadline and who will fold up. Fortunately, microfinance organisations will not be affected because they will no longer be regulated by the banking law but by the Microfinance Law that is tailor-made for their needs.

The insurance sector has also been affected by the new financial conditions and should set aside between two and three billion francs to stay afloat.

This is a clear indication that the Government will be relying heavily on the two sectors for its next development journey. Therefore both the banking and insurance sectors need to up their game. They will need to improve their packages by shedding off the unflattering impression that they are more concerned with profit-making instead of being a true development partner.

The next five years will be a pitiless decider, only the most resolute service provider will survive and the only way to do so will be tailoring their services on how to improve lives while remaining relevant at the same time



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