Harare, Zimbabwe – The Reserve Bank of Zimbabwe (RBZ) has revoked the operating license of Lion Microfinance Limited, trading as Lion Finance Zimbabwe, effectively immediately shutting it down as a deposit-taking institution.

In a public notice issued Wednesday, the central bank declared the cancellation of the company’s registration as a Deposit-Taking Microfinance Institution (DT-MFI). The cancellation took effect on October 24, 2023.

The notice, signed by the Registrar of Microfinance Institutions, P. T Madamombe stipulates that Lion Finance Zimbabwe is “with immediate effect prohibited from taking deposits from the public.” This directive leaves existing depositors unable to access or add to their funds through the company.

The RBZ attributed the cancelation to failure by the micro finance institution to maintain the prescribed minimum capital required for deposit taking institutions. The institution also failed to take remedial action to address the deficiencies identified during the ongoing supervision and failed to conduct itself in accordance with sound administrative, accounting and risk management practices as required under the Micro Finance Act.

Such cancellations typically follow severe violations, which can include corporate governance failures, insolvency, failure to meet capital requirements, or conducting business in a manner detrimental to depositors.

Lion Microfinance Limited is now legally required to cease all deposit-taking operations. The notice further orders the company to “settle its obligations to depositors” and to submit a plan for the orderly liquidation of its deposit-taking business to the Registrar.

The move highlights ongoing vigilance by the RBZ in policing the microfinance sector, which has seen rapid growth but also instances of instability and malpractice. Depositors with funds locked in Lion Finance are advised to seek direct communication with the company’s management for information on repayment procedures.

The RBZ is on record urging the public to verify the registration status of any financial institution before entrusting it with funds, directing individuals to the central bank’s official website or its offices for confirmation.