Clan savings and credit group registration

During this Christmas holiday we have planned to have a clan meeting at the village with a view to establishing a clan savings and credit group which will be receiving contributions from clan members and giving loans to the members at a low interest rate. One of the clan members who likes complicating things is saying that the group will be required to be registered with the Bank of Tanzania (BoT) for it to be legally able to receive contributions from its members and give loans to the members. Can you confirm if this assertion is correct? If the assertion is correct, can I know if there is an amount of minimum capital which the group is supposed to have at the time of registration?
MS, Moshi

The clan member is correct.

The Microfinance Act, 2018 and the Microfinance (Community Microfinance Groups) Regulations, 2019 recognises community microfinance groups like yours as Tier 4 microfinance service providers to be registered with the BoT for them to be able to legally receive contributions from their members and give out loans to members. Forming a clan savings and credit group with view to receiving money from the members and giving out loans on interest, however low the interest is, amounts to providing a microfinance service hence the group should be registered with the BoT.

Failure to register this with the BoT constitutes an offence under section 31(3) and 52(b) of the Act and regulation 31 of the Regulations attracting a fine of between 1 million and 10 million shillings. Moreover, members of the clan savings and credit group should not be below 10 and should not exceed 50. Powers of the clan savings and credit group will be limited to mobilising contributions from its members; granting loans to its members and mobilising funds for socio-economic welfare of its members. You will not be allowed to accept contributions from non-group members.

In seeking registration of the clan savings and credit group, you will need to submit among other things, two copies of the Constitution of the group, minutes of the clan meeting which formed the group, members’ resolution to form and register the group with the BoT; proposed organisational structure and names of the proposed leaders and list of members.

The law does not prescribe the minimum capital which the community microfinance group is required to have for it to qualify for registration nor the minimum balance to be maintained by a in your bank account.