MICROCAPITAL BRIEF: Jamaican Ministry of Finance May Regulate Microfinance Institutions, Cap Interest Rate at 40%

The Jamaican Ministry of Finance reportedly has announced plans to regulate microfinance institutions (MFIs) in the country. This is made possible by the proposed Microcredit Act of 2013 that would replace the Moneylending Act of 1999. Under the new law, the maximum annual interest rate would be set at 40 percent. The proposed Microcredit Act also requires lenders to register with the Ministry of Finance and meet certain stipulations such as disclosing loan terms and risks. This would include providing borrowers with loan repayment amounts in terms of both percentage of principal and dollar value. Some terms of the Moneylending Act that deal with one-off transactions between private individuals will remain in effect.

By Megan McGowan, Research Associate

Sources and Additional Resources:

[1] The Gleaner: “Moneylenders To Be Licensed Under Micro Credit Bill,” http://jamaica-gleaner.com/gleaner/20131103/business/business5.html

MicroCapital: “$34m in Loans Provided by Development Bank of Jamaica to Micro-, Small and Medium-Sized Business Created 3,324 Jobs over 5 Years,” September 13, 2013, https://www.microcapital.org/microcapital-brief-34m-in-loans-provided-by-development-bank-of-jamaica-to-micro-small-and-medium-sized-business-created-3324-jobs-over-5-years/

MicroCapital: “Jamaica’s Ministry of Finance Delays Microfinance Institutions’ Exemptions from Money Lending Act, Blocking Wholesale Funding from Development Bank of Jamaica,” June 17, 2013, https://www.microcapital.org/microcapital-brief-jamaicas-ministry-of-finance-delays-microfinance-institutions-exemptions-from-money-lending-act-blocking-wholesale-funding-from-development-bank-of-jamaica/

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