The former Crane Bank was placed under statutory management by Bank of Uganda (BOU) in September 2016 following a damning audit report that revealed insufficient capital levels, shrinking liquidity ratios, surging loan default levels and gross mismanagement, among others.
Signs of financial distress felt by the collapsed lender were evidenced by an emergency financial support request of Ush147 billion($41 million) made to the Central Bank almost a month before the statutory intervention decision was taken, according to reports received by the EastAfrican in 2017.
On the other hand, the idea of a revived Crane Bank in the aftermath of the historic court decision remains shrouded in suspense and mystery amidst legal excitement and the fallout of the Covid-19 pandemic on the local economy over the past two years.
Uganda’s Central Bank has lost a five year legal battle in the country’s Supreme Court against Sudhir Ruparelia, the founder of the defunct Crane Bank Limited in a landmark decision that could affect its bank supervision powers while raising questions about a potential revival of the collapsed lender.
The former Crane Bank was placed under statutory management by Bank of Uganda (BOU) in September 2016 following a damning audit report that revealed insufficient capital levels, shrinking liquidity ratios, surging loan default levels and gross mismanagement, among others. For instance, the non-performing loan ratio recorded in the bank’s credit portfolio was estimated at 30 percent, a figure higher than the overall industry loan default rate that stood at less than 10 percent during the same period.
Signs of financial distress felt by the collapsed lender were evidenced by an emergency financial support request of Ush147 billion($41 million) made to the Central Bank almost a month before the statutory intervention decision was taken, according to reports received by the EastAfrican in 2017. After four months of statutory management actions, BOU transferred certain assets and customer deposits belonging to the former Crane Bank to DFCU Bank Limited in a controversial transaction valued at Ush200 billion($56 million) that was concluded in January 2017.
The Central Bank and Crane Bank Limited subsequently sued Sudhir Ruparelia over massive fraud committed against the failed bank during 2017. Ruparelia was accused of siphoning Ush397 billion ($111.8 million) from the failed bank over a three year period. Ruparelia owned less than 50 percent shares in the former Crane Bank Limited prior its collapse, according to previous court records.
Though the Central Bank lost the […]
