The Uganda Microfinance Regulatory Authority (UMRA) has endorsed the decision to prohibit the use of national identity cards as collateral for loans from money lenders. UMRA Executive Director Edith Tusubira said the practice is illegal based on Section 69 of the Registration of Persons Act 2015, which states that national IDs remain government property and cannot be used to secure personal loans.
Tusubira’s comments came after the National Identification and Registration Authority (NIRA) issued a legal alert warning Ugandans against using their IDs as collateral. This followed an incident in September where police arrested two suspects for breaking into T.M.K Loans Services in Wakiso and stealing 104 national IDs that borrowers had deposited.
While supporting NIRA’s directive, Tusubira did not specify which law was being violated. However, she urged both borrowers and lenders to avoid using IDs as security. She encouraged lenders to accept alternatives like land titles instead.
UMRA is working with the Uganda Registration Services Bureau (URSB) to develop more options for collateral, like registered movable property titles. This aims to help those without land access credit. Tusubira noted borrowers were also being forced to surrender sensitive documents like ATM cards against loans, which she said is prohibited for data protection reasons.
The Security Interest in Movable Property Act 2019, which took effect in March that year, allows using movable assets like appliances, crops and livestock as collateral. This was meant to expand security beyond traditional fixed assets like land and salaries.