Central Bank Speaks Out On Bank Of India Reported Closure

The Bank of Uganda (BoU) has spoken out on reports that Bank of India Uganda Limited will close business in Uganda come next month.

In a statement dated February 20, 2018 obtained by Business Focus, Prof. Emmanuel Tumusiime-Mutebile, the Governor BoU said Bank of India Uganda is ‘safe and sound’.

“Reports circulating on social media to the effect that there was a meeting between officials of Bank of Uganda and the Bank of India Uganda Limited, at which it was decided to close the Bank of India Uganda Limited, or that Bank of Uganda has taken over the said bank, are false,” Mutebile said.

He added: “Furthermore, there was no meeting between the Deputy Governor, Bank of Uganda and officials of Bank of India Uganda Ltd, as has been alleged.”

Mutebile that Bank of India Uganda Ltd is operating normally, is profitable and fulfilling all regulatory requirements as set out in the Financial Institutions Act, 2004 as amended.

“There is no threat to the safety of the depositors’ funds,” he concluded. Can Mutebile’s remarks be taken as gospel truth? Well, when Crane Bank story was unfolding, Bank of Uganda defended the bank, saying it was sound and strong. However, after months of speculation, BoU took over Crane Bank management before selling it to dfcu.

Performance

Bank of India Uganda is one of the newest entrants in the Ugandan market. The bank re-entered the Ugandan market in 2012, having first opened shop in Uganda in 1953, but following the expulsion of Asians from the country by Idi Amin in 1972, the bank sold its assets to Bank of Baroda and exited the country. Bank of India Uganda hit the ground running. It was the 15^th most profitable bank in Uganda in 2016. It made a net profit of Shs2.3bn, up from Shs1.2bn in 2015. Its total assets also increased by 33.9% to Shs156bn in 2016, up from Shs116.5bn in 2015. The bank’s customer deposits grew by 65% to Shs99.1bn in 2016, up from Shs59.8bn. Loans advanced to customers also grew to Shs71.9bn, up from Shs50.8bn in 2015.

From the performance point of view, Bank of India is fairly doing well considering the fact that there are banks that have waited for nine years to break-even. Therefore, the reported exit (if true) has nothing to do with performance in Uganda, but maybe restructuring at the parent company in India.