Wednesday, May 22, 2024
Home > Banking > Bankers’ Association Wants Microfinance Institutions To Be Called ‘Banks’, Provide More Services & Products
Banking

Bankers’ Association Wants Microfinance Institutions To Be Called ‘Banks’, Provide More Services & Products

UBA Executive Director, Wilbrod Awor

The Uganda Bankers Association (UBA) has appealed to MPs on the committee of Finance to clear amendments in the Microfinance Deposit-Taking Institutions Act to allow microfinance institutions to be called “Banks” in order to enhance financial inclusion.

The bill also seeks to allow Microfinance Deposit-Taking Institutions to provide Agent Banking, Islamic banking, and Bancassurance services.

Members of the Uganda Bankers Association appeared before the Parliament’s Finance Committee and endorsed amendments in the Microfinance Deposit-Taking Institutions (Amendment) Bill 2022 which seeks to provide for use of the word “Bank” for Microfinance Deposit Taking Institutions.

Microfinance Operators who were part of the meeting led by the Executive Director of Uganda Bankers Association, Wilbrod Awor argued that the word “microfinance” has got a bad reputation in the public arising from several microfinance institutions that cheated Ugandans in the early days.

They justified amendments that allowing regulated microfinance institutions to be called “Microfinance Banks” will build public confidence required for the public to save in the financial system and further financial inclusion.

They  also welcomed a provision to allow microfinance to do agent banking, saying it will enhance outreach services at a lower cost and also improve public perceptions of MDIs.

The bill also offers an opportunity for Microfinance Deposit – Taking institutions to offer other products like Islamic banking and Banc assurance. According to Bankers Association, the insurance penetration which currently stands at less than 1% can be enhanced if microfinance institutions are allowed to do banc assurance.

Leave a Reply

Your email address will not be published. Required fields are marked *