Blue Financial Services loses operating license

• BNR says Blue was involved in fiscal fraud • The MFI has been under declaring Blue Financial Services Rwanda, the subsidiary of South Africa’s Blue Financial Services (BFS) ltd has lost its operating license barely three years after its launch in Rwanda, the central Bank has said.
Issued several warnings to Blue: François Kanimba, the BNR Governor (File photo)
Issued several warnings to Blue: François Kanimba, the BNR Governor (File photo)

• BNR says Blue was involved in fiscal fraud
• The MFI has been under declaring

Blue Financial Services Rwanda, the subsidiary of South Africa’s Blue Financial Services (BFS) ltd has lost its operating license barely three years after its launch in Rwanda, the central Bank has said.

Licensed as a Microfinance Institution (MFI), Blue has been offering a wide range of financial services including one to three months salary advances, three to 24 months personal loans and loans relating to home improvement, education and debt consolidation.

The Central Bank said that the company’s license was lost two months ago following discovery of fiscal fraud into their operations including under declaring. 

Blue joins the list of other MFIs that were recently closed down due unethical operations as part of the Central Bank’s measures to strengthen the sector.   

“There was a lot of mal practice and misreporting including their minimum capital declaration.  It was “killing” our micro –finance sector and since it was not helping; there was no reason to keep them,” François Kanimba, the BNR Governor told Business Times on Monday in a phone interview.

Kanimba observed that despite issuing several warnings to the institution to put right their operations that began last year, Blue did not respond positively forcing the regulator to take action.

While Blue was consistently reporting losses to BNR, Kanimba said his institution had discovered the company was repatriating a lot of money abroad.

“The question we were asking was “if you continue to declare losses, how do you continue to operate?” he questioned.

However, Blue says the decision was jointly decided by the two parties paving way for a systematic pull-out.

“This decision was primarily based on the capitalisation requirements for the company. Since this was a joint decision, we are in daily contact with the Central Bank to amicably manage this process,” said Morne Reinders, the company’s Group Corporate Affairs Executive in an email sent to Business Times.

Reinders also denied Central Bank’s reference to their offense as fiscal fraud indicating that “the allegations of “fiscal fraud” is viewed in a very serious light”.

“We categorally deny this allegation with contempt,” he said.

Currently Blue has approximately 800 customers who have benefited from their services. 

Though the operations of the company have been halted, Blue says collections on outstanding loans will continue.

“Core staff in this regard will be retained, whilst consultation sessions with all staff were held two weeks ago. Packages in line with the company’s policy and Rwanda labour law in this regard were allocated.” Reinders said.

With headquarters in Pretoria, South Africa, Blue has operations in thirteen African countries. 

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