Pay Your Loans or Negotiate with your Banks- UBA Tells Borrowers
Uganda Bankers’ Association (UBA) has encouraged borrowers to fulfill their obligations or hold talks with their respective banks to avoid unnecessary inconveniences, Chimp Corps report.
This comes at a time Diamond Trust Bank (DTB) is battling flashy businessman Hammis Kiggundu over Shs 39.7bn which the businessman acquired to facilitate his business and reportedly defaulted on payment.
Ham later dragged DTB to court, saying the money was deducted from his accounts.
Ham had acquired the money in four tranches: $6.2m, $3.2m, $458,604 and Sh2.8b from both DTB Uganda and DTB Kenya between February 2011 and September 2016.
The loans were consolidated later in 2018 and were to run for five years, ending August 23, 2023.
In a letter dated April 11, 2019 to DTB, Kiggundu admitted the debts and promised to repay them by selling off his complexes at Makerere.
He, however, later went to court to secure an injunction against DTB from selling off his interest in the land and properties comprised at Kawuku, Victoria Crescent and Makerere Hill Road until determination of the main suit.
DTB challenged this petition, saying it was a “ploy to delay the recovery of the outstanding loan amounts and /or the realization of security and prayed for dismissal of the suit with costs.”
The case has attracted negative publicity for DTB which has vowed to recover its money from Ham.
UBA said in a statement to ChimpReports that it welcomes well-intentioned suggestions on how to improve the sector based on genuine concerns not falsehoods packaged under the guise of nationalist sentiments.
“We must never remove our focus from credit risk,” said UBA Executive Director Humphrey Owor.
“Borrowers should always be encouraged to pay their loans or dialogue with the lender in times of stress to minimize or manage risk for either party, as well as maintain stability and growth of the sector so that the economy expands and others can benefit from the same services,” he added.
The banking industry has previously been criticized for not simplifying information used by borrowers to appreciate their obligations.
UBA said borrowers must fully understand the structure and appreciates the value add and benefits of each structure.
“Financial institutions always provide borrowers with details of every transactions before sign off and this can be even better managed if the borrower employs competent people, and permits them to perform their professional responsibilities,” said Owor.
“Good borrowers also tend to attract more favourable terms and there is a high positive correlation between good governance and business performance,” he added.
“Loan terms typically include disbursement terms tied to specific milestones both to avoid burden to the borrower for funds not utilized as well as a control framework to avoid abuse. Where these terms are deviated from and not remedied in good time by either party, loan stress could arise.”
The commercial court will on August 27 deliver its ruling on UTB’s dispute with Ham.