Uganda’s Central Bank is yet to formally revoke licenses of seven defunct banks that were controversially closed 20 years since the first bank was closed in closed in 1993.
Appearing before the Committee of Commissions, Statutory Authorities and State Enterprises (COSASE) on Friday, Margaret Kagwa, Legal Counsel, Bank of Uganda admitted that BoU has never written to the owners of the banks in question formally about revocation of licenses.
She said that there was no need to issue this notice because the Central Bank had taken over management of these banks during receivership period.
COSASE is currently probing Bank of Uganda officials over irregularities in close of seven commercial banks. The banks were closed between 1993 and 2016. They are; Teefe Bank, International Credit Bank Ltd, Greenland Bank, The Co-operative Bank, National Bank of Commerce, Global Trust Bank and Crane Bank Ltd (CBL).
Kagwa made the revelation after Anita Among, COSASE Vice Chairperson, asked the Bank of Uganda officials to provide evidence of the instruments for the revocation of the licenses of the defunct Banks.
“A license is conditional approval for one to operate if one has conditional capital, has fit and proper team to run the bank. When the Central Bank takes over a bank, there is no paying of license fee so the license isn’t operational and because license is conditional to do work, then the license lapses,” Kagwa said, adding that when a financial institution is taken over Bank of Uganda, it is the Central Bank in charge of that license.
Among then fired back asking Kagwa why Bank of Uganda would write a letter announcing to the Banks of the licenses, but fail to do the same when the licenses elapses.
“Do you issue license when a financial institution is beginning to operate, how will I know that my license has been revoked because of failure to fulfill conditions when you don’t write to me?” Among said.
Kagwa maintained that licenses of financial institutions are different from other institutions and once Bank of Uganda takes over the Bank, the license ceases to exist automatically.
But Among wondered how the public and owners of the bank would know.
“There is no way you can write to me that you have given me a license and not write to me that my license has been revoked, the press statement is for the public,” Among said.