Kabale Deputy Resident District Commissioner Michael Muramira Kyakashari has raised concern over alleged exploitative practices by money lenders and microfinance institutions, saying residents are losing property and productive time over loan disputes.
While opening the Bank of Uganda Town Hall meeting at White horse inn in Kabale Municipality, Kyakashari said his office receives numerous complaints from residents who claim to have been harassed, arrested or lost property after borrowing money from lending institutions and individual money lenders.
“In Kabale and surrounding areas, we are facing a challenge of the so-called money lenders. Most of the people here are suffering,” he said.
He cited a case involving a resident who borrowed Shs2.5 million from a microfinance institution registered by the Bank of Uganda but later opted to repay the money with interest after failing to proceed with the loan agreement.
According to Kyakashari, the borrower was told he would still be required to pay interest for the entire year.
“When he returned the money, the bank official told him that he will still pay the interest for the whole year. I called the bank official but he spoke uncoordinated words,” he said.
The deputy RDC also accused some lending institutions of using unlawful methods to recover loans, including allegedly arresting and detaining borrowers on their premises.
“Some of these microfinance lending institutions have turned themselves into police. They have even gone ahead to arrest and detain them within their bank premises. We have blacklisted a number of them,” he said.
Kyakashari singled out BRAC Bank, alleging that some of its officials arrest clients at its premises.
“I will not fail to say this, some people from BRAC Bank arrest people inside bank premises. Sometime back I went there and rescued some people,” he said.
The allegations could not immediately be independently verified.
Kyakashari also criticised individual money lenders who allegedly use bailiffs to arrest borrowers before investigations into loan disputes are conducted, saying such practices undermine the justice and security systems.
He said loan-related complaints are consuming much of the RDC’s office time that would otherwise be spent monitoring government programmes.
“What I have done lately, when they come to my office with their agreement, I confiscate them, tear them and tell them to go to court,” he said.
CUE IN KYAKASHARI…ON THE MATTER…RR.ENG//
Kyakashari said many residents had lost property to money lenders and some were spending considerable time trying to resolve loan disputes.
He also said some residents were increasingly turning to private lenders instead of government poverty alleviation programmes such as the Parish Development Model (PDM).
He added that a significant number of land-related cases before courts in the district were linked to money-lending transactions.
Kyakashari urged money lenders and savings and credit cooperative organisations (SACCOs) to avoid arresting customers and instead use lawful mechanisms to resolve disputes.
CUE IN KYAKASHARI…ON THE MATTER…ENG//
Representing the Governor and the Deputy Governor Hannington Wasswa, Director, Commercial Banking, Bank of Uganda Director of Commercial asked residents in Kabale and the wider Kigezi sub-region to save and borrow only from financial institutions licensed and supervised by the central bank.
Wasswa said dealing with regulated financial institutions gives customers avenues for redress because the institutions operate under regulatory rules and supervision.
He said Bank of Uganda licenses, regulates and supervises commercial banks, credit institutions and microfinance deposit-taking institutions, among others.
Wasswa advised residents to verify the licence of a financial institution before depositing their money or obtaining a loan.
He said customers can check whether an institution is licensed by looking for a Bank of Uganda licence displayed at its premises.
Where regulated institutions breach operational rules, Wasswa said the central bank has powers to take appropriate action, including imposing sanctions.
CUE IN WASSWA….ON THE RESPONSE….ENG//
Wasswa also urged the public to handle banknotes carefully and avoid writing on, tearing or otherwise damaging them so they remain fit for circulation and facilitate business transactions.
CUE IN WASSWA….ON BANKNOTES….ENG//
