What legal requirements do I need to adhere to start a Micro Finance business in South Africa?
Register with the NCR*
The National Credit Regulator (NCR) was established as the regulator under the National Credit Act No. 34 of 2005 (The Act) and is responsible for the regulation of the South African credit industry. It is tasked with carrying out education, research, policy development, registration of industry participants, investigation of complaints, and ensuring the enforcement of the Act.
The Act requires the Regulator to promote the development of an accessible credit market, particularly to address the needs of historically disadvantaged persons, low-income persons, and remote, isolated or low-density communities.
The NCR is also tasked with the registration of credit providers, credit bureaux, and debt counsellors; and with the enforcement of compliance with the Act.
It is a requirement of any party or juristic person who advances money and or who extends credit to register with the NCR.
How to register with the NCR
- Complete the NCR Application Form
- Have a company registration or be a sole proprietor
- Provide a copy of the share certificate/s if the application is a company
- Provide certified copies of ID/Passports of all members/directors/trustees/partners/sole proprietors
- Complete & sign resolution document if the applicant is a juristic person
- Provide a criminal name clearance certificate for all members/directors/trustees/partners/sole proprietors issued by the South Africa Police Services (SAPS)
- Proof of payment of the registration fee
- Non-Refundable application fee of R 500
- Branch fee of R 250 per location or premises where you will be operating from
- Registration Fee of R 1500
- Letter from the bank confirming the applicant’s banking details or a copy of a cancelled blank check
- Proof of registration with the South African Receiver or Revenue Services (SARS)
* Above information courtesy of the National Credit Regulator (NCR)
Once you are registered with the NCR, you may legally enter into credit agreements with consumers.
The following systems will assist you in running your business:
Client & Loan Administration System
This will assist you in managing your clients and loans.
It’s a system where you can:
- capture your clients
- create different loan products
- set it to calculate the interest and fees correctly
- perform affordability checks on prospective clients
- print out loan agreements
- manage existing clients’ loans
- manage clients who don’t pay on time
- provide reports on the entire loan book
- submit quarterly/yearly statistical returns to the NCR
To collect the loan instalments from your clients. Once a client takes a loan with your company, you will need a system in place to collect the instalment from that client on their paydate.