Introduction
In Rwanda, Non-Deposit Taking Lending Financial Institutions (NDFI) are legal entities that regularly and principally performs financial services in the form of non-deposit taking lending services or related financial services.
Unlike other financial institutions such as Banks and micro finance institutions, they do not engage in collection of deposits from customers but are authorized to provide credit services, debt collection services and other financial services that the National Bank of Rwanda may approve.
Please note that credit services entail only the business of granting loans either secured or unsecured.
How do I set up a NDFI in Rwanda?
To set up a NDFI in Rwanda, the proposed company must be registered as a public limited liability company through the Rwanda Development Board (“RDB”) under the office of the Registrar General which is the body saddled with the responsibility of business/company registration in Kigali, Rwanda.
Is there any minimum share capital requirement for setting up a NDFI in Rwanda?
Generally, there is no required minimum share capital in registering a company in Rwanda However, National Bank of Rwanda (“Central Bank”) which is the body that regulates NDFI mandate companies seeking to provide non deposit taking lending services to be registered with a minimum share capital of FRW 50,000,000 (Fifty Million Rwandan Francs) ($50,000).
Please note that the share capital must be fully paid up and may include paid-up shares, part of technical provisions, undivided profits and other incomes.
Please note also that the Central Bank may require a company to have more than the minimum paid up capital, depending on the size, nature and the complexity of the proposed business.
What are the particulars required to incorporate a NDFI with the RDB?
The following particulars will be required to incorporate NDFI:
i. Three proposed names of company.
ii. Nature and objectives of the business.
iii. Details of directors and shareholders of the proposed company to include the following:
a. Names;
b. Postal and residential address;
c. Occupation;
d. Email address, Telephone number, Date of birth and Electronic signatures of directors and shareholders
Please note that a company seeking to engage in non-deposit taking lending services in Rwanda must have a minimum of three (3) directors on the Board and at least two of the directors must have experience in the core business of NDFI and one must be an independent Director.
i. Details of division of shares between the shareholders of the company.
ii. Proposed physical office address of the company;
iii. Identity card of the shareholders and directors;
iv. Passport photographs of directors and shareholders;
v. Memorandum and Articles of Association;
vi. Where it is a subsidiary, Certificate of Incorporation and Articles of Association of the holding company to open up a branch and appointment of branch representative residing in Rwanda;
vii. For foreign entities corporate shareholder(s)/directors(s), a notarized shareholder/board resolution notarized in the country of incorporation to set up a NDFI in Rwanda.
What is the cost of incorporating an NDFI with the RDB?
Registration of company with the RDB is completely free. However, charges will apply where the company decides to engage in post incorporation activities e.g., increase in share capital of the company, change of directorship, etc.
Please note that the licensing of an NDFI is not free, the costs are provided below.
Can NDFI in Rwanda be fully foreign-owned?
Yes, the government of Rwanda allows foreign investment and ownership in NDFIs with no limitation on equity or ownership.
Are there special requirements for foreigners setting up NDFI in Rwanda?
It is mandatory for foreigners setting up a company in Rwanda to appoint a resident director in Rwanda who may either be a Rwandan citizen or a foreigner with a valid resident or work permit.
Also, foreigners who will be signatories to the company’s bank account must have their international passport and bank forms authenticated/notarized in the nearest Rwandan Embassy/High Commission/Consulate in their country of residence.
Please note that appointment of a resident director helps to increase the probability of timely corporate bank account approval.
Do you require any regulatory licence to engage in the business of Non-Deposit Taking Lending Services in Rwanda?
Yes, any company seeking to engage in non-deposit taking lending services must obtain a licence from the National Bank of Rwanda before commencing business activities.
What are the requirements for processing NDFI licence?
A company seeking to engage in non-deposit taking lending services must make an application in writing to the National Bank of Rwanda in a prescribed form and accompanied by the following:
i. Certificate of Incorporation together with certified copy of Memorandum and Articles of Association;
ii. Evidence of payment of the Application Fee;
iii. A dully completed and notarized Information sheet;
iv. A dully completed and notarized personal declaration form for directors, senior managers, significant shareholders or indirect owners of at least 10% shares of the company] with the following:
a. A certified statement of assets and liabilities;
b. Latest tax compliance certificate or certified true copy of income tax returns;
c. Two letters of character references from individuals other than relatives of the shareholders/directors/senior managers who have personally known them for at least ten years;
d. Duly certified letters from financial institutions with whom any of them has had dealings for the last five years on the performance of past and present accounts;
e. Detailed Curriculum Vitae;
f. Certified true copies of degree certificates;
g. Recent Credit report from a licensed credit bureau;
h. Copy of International passport;
i. Company’s profile;
j. Name and address of bankers and external auditors;
k. Police clearance/criminal certificate.
v. A feasibility report including a business plan and financial projections for the first three (3) years and intended areas of specialization and for new applicant, a statement under oath that the invested funds are not coming from a criminal and suspicious activities.
vi. Any other information that the National Bank of Rwanda deems necessary to assess the application.
What are the key considerations adopted by the National Bank of Rwanda in assessing the application for NDFI licence?
In evaluating the application for NDFI licence, the National Bank of Rwanda will consider the following:
1. The character and fitness of the company’s shareholders and management ensuring they meet the required standard for NDFI licence.
2. The adequacy of the company’s capital structure vis-à-vis the nature and scale of the proposed business.
Can NDFIs open other branches with a single licence in Rwanda?
Yes, a company that successfully obtains NDFI licence can elect to open different branches of the business in Rwanda with prior approval of the National Bank of Rwanda. However, in the event that an NDFI intends to open a branch, the following documents must be submitted to the National Bank of Rwanda for information:
1. Board Resolution of the company’s decision to open a branch.
2. A branch charter showing the business analysis and the profitability assessment
What are the acceptable modes of funding NFDIs in Rwanda?
A company seeking an NDFI licence must ensure that its funds is not from illegal or illegitimate sources. NDFI’s activities may be funded through the following sources:
1. Shareholders’ funds;
2. Loans; and/or
3. Donations and grants.
What best practices can NDFIs adopt in its operations?
1. Maintain proper accounting and keep up-to-date audited financial statements
on NDFI’s activities.
2. Display company’ terms and conditions for lending and other services provided, in a conspicuous location in the company and allow any interested party to be acquainted with them.
3. Carry out proper due diligence before advancing a loan or granting any credit to a borrower, including financial position of the borrower to satisfy itself that the borrower is able to repay the loan or the credit.
4. Not to grant loans or a credit to a person with a non-performing loan in another financial institution.
5. Must have a functional Board of Directors and must be accountable for its actions and activities to the shareholders and the Central Bank.
6. Must ensure that the required number of Directors on the Board is in line with the provision of the NFDI Regulation.
7. A director in NDFI board must not be a current employee or a director of any bank or financial institution, except where the NDFI is a subsidiary of a bank or other financial institution.
8. Ensure that its senior managers have relevant qualifications and experience to manage the business of NDFI.
What is the implication of engaging in non-deposit taking lending services without a valid licence in Rwanda?
It is illegal to engage in NDFI services in Rwanda without a valid licence issued by the National Bank of Rwanda and any person that is guilty shall be liable, on conviction, to a fine of FRW 5,000,000 (Five Million Rwanda Franc) ($5,000) as pecuniary sanctions and the closure of the illegal business activities.
What are the procedures for setting up a NDFI in Rwanda
i. The process of incorporating any company in Rwanda begins with a representative of the proposed company creating a user account using an active email address, uploading an identity card and passport photograph;
ii. Request and obtain an electronic signature.
iii. Reserve proposed company name and obtain approval.
iv. Fill and submit online application form and upload the required documents as attachments.
v. Obtain an electronic copy of the registration certificate— this is usually sent to the company representative’s email address or can obtain a hard copy physically from the RDB.
vi. Make an application for regulatory licence to the National Bank of Rwanda and attaching all the required documents and evidence of payment of application fee.
vii. The National Bank of Rwanda reviews the application and may require the applicant to provide additional documents.
viii. Upon satisfactory review of the application, the National Bank of Rwanda shall direct the applicant to pay the applicable licence fee and thereafter proceed to issue the NFDI licence.
Are there other mandatory fillings a NFDI is required to undertake after incorporation?
After incorporation, the NDFI will undertake the following fillings:
1. Registration with the Rwanda Revenue Authority
It is mandatory for any person who sets up any taxable business to register with the Rwanda Revenue Authority (RRA) within a period of seven (7) days from the beginning of the business activity.
It is also mandatory for every taxable business activity in Rwanda with a turnover exceeding RWF 20,000,000 (Twenty Million Rwanda Francs) in the previous fiscal year or RWF 5,000,000 (Five Million Rwandan Franc) in the preceding quarter to register for Value Added Tax (VAT) within seven (7) days from the end of the year or quarter respectively.
2. Registration with the Rwanda Social Security Board (RSSB)
RSSB is a governmental body in charge of social security services that coordinates Rwanda Medical Insurance Scheme (RAMA) and the Social Security Fund (SSF).
It is mandatory for all foreigners working in Rwanda to register with the RSSB.
What are the applicable fees for obtaining a NDFI licence in Rwanda?
The applicable fees for obtaining NDFI licence are as follows:
| S/N | Particulars | Fees (FRW) |
| 1 | Application Fee | 50,000 |
| 2 | Licence Fee | 100,000 |
| 3 | Annual supervision fee | 500,000 |
The total equivalent of the expenses in United States Dollars is less than $5,000.
What is the validity of NDFI licence?
NDFI licence is valid for one (1) year and must be renewed every 31st day of January.
What is the timeline for incorporating a NFDI with the RDB and obtaining regulatory licence from the Central Bank?
The timeline for registering a company in Rwanda is 2 to 7 days.
The timeline for obtaining the NFDI licence ranges from 4 to 6 Months.
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About KORIAT & CO.
We are a commercial law firm in Nigeria with network of lawyers and consultants in Ghana, Kenya and Rwanda. The above article is not legal advice and does not automatically make our readers our clients unless they specifically instruct us to act or represent them in any way.
We assist local and foreign clients to process company registration and business licences in Nigeria, Ghana, Kenya and Rwanda.
Please contact Koriat & Co. through admin@koriatlaw.com or 09067842241 if you require additional information about or assistance in making the application for a Payment Service Providers’ licence in Ghana, Nigeria, Kenya or Rwanda.
