Prof. Mutebile said: “Bank of Uganda’s regulatory and supervisory powers only apply to financial institution business conducted by BoU licensed entities in or outside Uganda. Businessman Hamis Kiggundu holding his face as court ruled in his favour. Prof. Mutebile said: “Bank of Uganda’s regulatory and supervisory powers only apply to financial institution business conducted by BoU licensed entities. (File photo) KAMPALA – Bank of Uganda does not regulate the extension of loans or commercial transactions using funds by foreign banks that do not take deposits from the public in Uganda, Governor Prof. Emmanuel Tumusiime-Mutebile has said.
This comes after court ruled that a sh41b syndicated loan to businessman Hamis Kiggundu by DTB bank Kenya was irregular, illegal, null and void and unenforceable because the bank is not licensed by the Bank of Uganda.
Bank of Uganda’s statement comes after government, through the office of the Attorney General, was dragged to the East African court of justice in Arusha by Male Mabirizi representing the moneylenders union for contravening principles enshrined in the East African Community Common Market by restricting the movement of capital.
The Central Bank noted that foreign banks lending deposits that are held in jurisdictions other than Uganda are regulated and supervised by their home authorities.
It added that it is not mandatory for a foreign bank to establish a representative office in Uganda in order to conduct lending or non-deposit-taking activity. Bank of Uganda Governor, Prof. Emmanuel Tumusiime-Mutebile Prof. Mutebile said: "Bank of Uganda’s regulatory and supervisory powers only apply to financial institution business conducted by BoU licensed entities in or outside Uganda or activity which should be licensed as such in Uganda. These powers do not extend to activities of foreign banks outside Uganda licensed by foreign regulators."
Earlier, Principal Judge, Dr Flavian Zeija issued a stay of execution of Justice Henry Adonyo’s ruling pending an appeal on the matter in the presence of DTB’s lawyers Kiryowa Kiwanuka and Usama Sebuufu.
In the meantime, Government has reassured development partners, many of whom have provided syndicated loans for various projects of its commitment to meet payment terms following a commercial court judgment against syndicated debt.
Speaking on behalf of the Ministry of Finance Permanent Secretary/Secretary to the Treasury, Dr Sengonzi Damulira revealed that government had received several concerns from development partners and financing institutions about its position on syndicated financing arrangements and public debt obligations.
"The government of Uganda wishes to reiterate its commitment […]
