Finance

BoU directs Banks to use National IDs in new loan applications

BoU’s ED for Supervision Dr Twinemanzi said the move by the central bank is intended to promote financial inclusion and broaden credit information sharing.

KAMPALA, UGANDA: Bank of Uganda has directed that all individuals seeking to borrow money from commercial banks and other financial institutions will now be required to present their National Identification Cards instead of the financial card.

According to a BoU circular dated October 21, 2022, signed by Twinemanzi Tumubweinee who is the Supervision Executive Director, all new credit applications for loans, account opening, consumer credit transactions and others must be processed at any financial institution using NIN with effect from 1st December 2022.

Dr Twinemanzi said the move by the central bank is intended to promote financial inclusion and broaden credit information sharing.

He explained that whereas financial institutions have been giving Financial Card Numbers for all Credit Applications (CAP) and Credit Borrower Account (CBA) records, this limits access to financial services to a large proportion of the population.

“To promote financial inclusion and broaden credit information sharing, Bank of Uganda is with immediate effect revoking the above circular. Accordingly, all participating institutions shall commence a transition from the Financial Card Number to a NIN as the mandatory identifier for Ugandan citizens and other identifiers,” the circular reads in part.

Dr Twinemanzi explained that in the interim, all credit records of non-Ugandans shall be supplied to the CRBs with a combination of either a Refugee Number, or Passport Number or Work Permit Number until such a time when National Identification Regulatory Authority (NIRA) starts issuing the Alien Identification Numbers.

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“Effective 1st December 1, 2022, all loans to Non-Individual Borrowers or corporate entities licensed to conduct business in Uganda shall be reported to the CRBs with a unique registration number issued by the relevant registration authority in accordance with the laws of Uganda,” the circular reads.

“To avert the risk of losing historical borrower profiles, there shall be a transition period that shall expire on 31st December 2022. During this transition period, Participating Institutions are required to update the profiles of individual borrowers or consumers of credit with existing unretired credit facilities, with the applicable unique identifier or registration number earlier prescribed in this Circular,” he added.

Dr Twinemanzi said effective 1st January 2023, all individual Credit Borrower Account (CBA) records shall be supplied with a NIN or other unique identifier duly issued by the relevant registration authority in accordance with the laws of Uganda.

“Detailed guidance on borrower identification and reporting shall be included in the revised Data Submission Manual and Data Validation Rules,” he added.

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where non Ugandans dealing with Banks are affected, their credit records must be forwarded to Credit Reference Bereau (CRB) with either a refugee number or passport number or a work permit number until when the National Identification Regulatory Authority (NIRA) starts giving them Alien Identification Numbers.

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