The micro finance industry is a fast growing one in South Africa.The growth of this sector has been precipitated by the rising demand for credit and finance by individuals,families and even business houses. Perhaps one big question for aspiring entrepreneurs in this sector is,what are the Micro Lenders legal requirements in South Africa?
For starters,it is important to establish the fact that this industry operates under the National Credit Regulator(NCR) which is a regulator under the National Credit Act No 34 of 2005 and is responsible for the regulation of the South African credit industry.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 bureaus and debt counselors.
It is therefore a requirement of any party or juristic person who advances money or who extends credit to register with NCR. The following are the registration steps involved.You first complete the NCR Application Form, have a company registration or be a sole proprietor, provide a copy of the share certificate, provide certified copies of ID/Passports of all members, directors, trustees, partners and sole proprietors, complete and sign resolution document if the applicant is a juristic person, provide a criminal name clearance for all members issued by South Africa Police Services, proof of payment of the registration fee,letter from the bank confirming the applicants banking details or a copy of a cancelled blank cheque and then finally,there must be proof of registration with the South African Receiver or Revenue Services.
Once registered with the NCR,you may legally enter into credit agreements with consumers.The Client and Loan Administration System and the Payment System.The Client and Loan Administration System assists clients with capturing clients, creating loan products,print out loan agreements, manage existing client loans, provide reports on the entire loan book,etc.The Payment System collects loan instalments from 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.
The above information in a nutshell sums up the legal requirements for setting up a Micro Finance Business.