CRIMINALISATION OF THE NON-REIMBURSEMENT OF LOANS ARISING OUT OF A CONTRACTUAL RELATIONSHIP: AN EYE VIEW OF LAW NO. 2019/021 TO LAY DOWN CERTAIN RULES RELATING TO CREDIT ACTIVITY IN THE BANKING AND MICROFINANCE SECTORS IN CAMEROON

Abstract

The difficulty of providing traditional collaterals of immovable properties such as land, house and other heavy machineries, have pushed many banks and microfinance institutions to provide loans even in the absence of collaterals which is a most probable guarantee for loan repayments. As such, the number of delinquencies is indisputably a challenging enemy of banks and microfinance institutions in Cameroon. It is either borrower’s do not promptly repay their loans or deliberately default, leaving banks and microfinance institution to suffer the consequences. Before the Law No. 2019/021 to Lay down certain rules relating to credit activity in the banking and microfinance sectors in Cameroon, breach of a loan agreement could only be seen as a civil or commercial matter to which remedies such as damages and specific performance did apply. The introduction of penalties for loan defaults on the grounds of bad faith, use of fake or false documents by a borrower, attempt or destruction of evidence by a borrower is what makes the 2019 law peculiar. This act of criminalisation which is an innovation to the law regulating banks and microfinance institutions in Cameroon, long existed in some other countries. The worth of banks and microfinance institutions in a country: its ability to reduce poverty and improve economic growth, justifies the need for criminalising the non-reimbursement of loans when it results from deliberate default on the part of the borrower. The absence of penalties for deliberate defaults will increase the number of bankruptcy of banks and microfinance institutions.