One year given to bank debtors to sell their mortgaged property

The central bank has recently revised the law on banks and included some innovations. Some of them are the protection of consumers of financial services and improved access to credit. Based on daily activities and Burundi integration into the East African community, the Central Bank decided to review some articles on the sale of the mortgaged property.

Prosper Ngendanganya: “The revised bank law protects more the consumers of banking services”

Prosper Ngendanganya: “The revised bank law protects more the consumers of banking services”

Prosper Ngendanganya, Director of Supervision and Financial Stability at Burundi Central Bank (BRB) says the conflicts often occur between debtors and their banks and the latter are obliged to sell their mortgaged property without considering the interest of the customers.

According to the revised bank law in its article 96, Ngendanganya says the mortgagor shall sell, within one year starting from the first warning, the mortgaged property themselves in order to pay back the mortgagee with the price of the achievement.

Mr. Ngendanganya says, however, that in the absence of the sale by the debtor himself within the set deadline, the creditor may address a request for public sale of the mortgaged property to the president of the commercial court. .“The latter shall request the office of the title deeds to organize an auction sale within a month”, he says. Prosper Ngendanganya also says the creditor cannot acquire the real estate property except when the price offered is lower than the value of the appraised judgment at the time of granting the credit.

Noël Nkurunziza, the chairman of the association of Burundian Consumers says it is a huge relief for debtors or consumers of banking services. He says the law has been revised in collaboration with banks, traders and consumers. Previously, he says, banks would sell the mortgage when the debtor failed to pay back the debt and the mortgaged property was sold at lower price”, he says.

Nkurunziza believes things will improve step by step. “Though a year granted to debtors to sell their property in case of failure to pay back the bank is too short, at least they shall sell their property at the right price,” he says.

Nkurunziza urges debtors to consult experts before applying for any credit in the bank. “They may seek to know the bank views before starting any activity with a big capital. Banks should also facilitate customers when drawing up contracts with the latter.”

The revised bank law promulgated on 22 August 2017 replaces the one of 2003.