Microfinance Bill, 2012 H.B. 2, 2012 (h) purchasing or otherwise acquiring any land except as may be reasonably necessary for the purpose of expanding the microfinance business; or (i) such other business as the Reserve Bank may prescribe. (2) Anyone who contravenes subsection (1) shall be guilty of an offense and shall be liable to imprisonment for up to five years or a fine not exceeding level twelve or both such imprisonment and fine. 26 Requirements for lending by microfinance institutions (1) Before a microfinance institution makes a loan or advances credit to a borrower, the institution shall take reasonable steps to ensure that ⎯ (a) the borrower will be able to fulfil his or her obligations under the agreement while still being able to meet the necessary living expenses of himself or herself and his or her family; and (b) the borrower understands the essential terms of the loan agreement; and (c) a credit control advisor provides the borrower with the necessary information to enable him to manage his or her credit. (2) A microfinance institution shall allow a borrower an opportunity to read the loan agreement or to have it read to him or her, before he or she signs it, and shall provide the borrower with a copy of the agreement when he or she has signed it. (3) If a microfinance institution makes a loan or advances credit without complying with subsection (1) or (2)⎯ (a) no interest shall be payable on the loan or advance; and (b) the capital sum of the loan or advance shall not be recoverable from the borrower unless a competent court, on application by the microfinance institution, has condoned the institution’s failure to comply with the provision concerned. 27 Employees and agents of microfinance institutions Every microfinance institution shall ensure that all its employees and agents engaged in soliciting; concluding and enforcing loan agreements are given adequate instruction in the requirements of this Act. 28 Restriction on payment of dividends by microfinance institutions A microfinance institution shall not pay a dividend to its shareholders unless it has made adequate provision against losses on loans and has taken adequate steps to ensure compliance with the financial requirements specified in this Act. 29 Restriction on other business that may be carried on by microfinance institutions (1) Subject to this section, without the Registrar’s prior approval and on such terms and conditions as the Registrar may determine, no registered deposit-taking microfinance institution shall⎯ (a) engage on its own account in; or (b) hold shares in a company which engages in; - 18 -