Abstract:
The present study is entitled “Effectiveness of securities offered to banks and financial institutions in Rwandan law” to discuss the legal issues and suggest alternatives to better assure effective solvency. As problem statement, to get a loan before banks and other financial institutions, the latter require securities to insure their ability to periodically pay back the lent amount of course with consented interests. Currently in Rwanda, securities which are often offered are the monthly salary for employees with open-ended contract; mortgage which involves encumbering an immovable with value exceeding the requested amount and to be auctioned if the debtor is not regularly paying; sureties who assure to replace the failing debtor, credit insurance guaranteeing banks to reimburse the due money. As hypothesis, contrarily to short term credits which are often reimbursed by debtors given that the amount is not often considerable, the long-term solvency is still a concern so that banks are facing balance sheet insolvent debtors; to assure the solvency of debtors, banks may follow up and countercheck the viability of guaranties offered and resort to other additional securities to fill eventual future gaps of the classical securities. As objectives, the research aimed to overview the general regime of the securities in Rwandan law; to point out reasons of the fragility of debt securities in Rwandan banks and to suggest solutions to raised legal issues. To achieve such objectives assigned to the study, it was necessary to use technique by reading different books, dictionaries, international laws and electronic documents. Different methods were used to finish this work in successful manner, the following methods were used: historical method, comparative method, analytical method. In this regards, the study consisted of five chapters. The first chapter deals with the general introduction. The second Chapter 2 developed the conceptual and theoretical framework of the study whereby are defined technical and cross-cutting concepts of the study such security, mortgage, pledge, personal loan, etc. Chapter 3 assessed the fragility of securities insuring credit in Rwandan banks where there was found out the strengths and weaknesses of the targeted guarantees. Chapter 4 focused the legal and political mechanisms proposed to strengthen securities in Rwandan banks.
