The National Identification and Registration Authority (NIRA) has outlawed the use of National Identification Cards as collateral for obtaining a loan.
According to a letter from NIRA confirming the development, the National ID is government property, as stated in Section 69 of the Registration of Persons Act, 2015, and should not be used for such activities.
“NIRA would like to note that an issued National Identification Card remains the property of the Government of Uganda, issued as proof of identity and citizenship according to the Regulations of Persons Act,” the letter read.
The authority urged money lenders who have been retaining National ID’s to put a halt to it.
“Money lenders should stop this act because it is an illegal practice that violates the rights of the cardholders,” NIRA added.
Additionally, they urged cardholders to stop using their IDs as collateral when applying for loans and to report anyone using their National IDs as security to the local NIRA office.
However, money lenders have expressed their concerns regarding the new ban, stating that it could potentially disrupt the seamless operation of businesses.
In the field of lending, be it money or other items such as clothes, it is common practice for lenders to request National ID’s as a form of security prior to providing their goods or services.