The central bank has done a commendable job in regulating financial institutions in the country and has been hailed in East Africa and the whole of Africa, according to Emmanuel Tumusiime Mutebile.
The Bank of Uganda governor made the revelation, through a speech read by Dr. Adam Mugume, the executive director of research at the Bank of Uganda on Friday.
This was during a town hall meeting in Kabale aimed at explaining the role of the bank in promoting the economic wellbeing of the citizens.
“I am happy to say that BoU has been hailed across the East Africa region and the whole of Africa for outstanding supervision and regulation of financial institutions,” Mutebile said, adding that the banking sector in the country was healthy, despite some complaints that some of the banks that were closed in the country were closed illegally.
“Accordingly, today the information shows that the banking sector is healthy. Banks possess sufficient financial resources and the majority are making profits” Mutebile said.
He showed a lot of concern over that failed banks that were locally owned, saying BoU has done its mandate to regulate the banks fully despite the banks being closed.
“I can confidently say none of the banks failed because of ‘lack of supervision’ from the central bank.
However, he said the said banks failed because they had bad loans that were not fully serviced or went unpaid entirely resulting in losses; insider loans to directors and related companies; mismanagement; misreporting; liability asset mismatches; and under capitalisation, among others.
Mutebile warned that the central bank only takes over the failed commercial banks where they fail to prove to be fit to continue operating normally.
“The central bank takes control and follows a series of steps to ensure that depositor’ interests are preserved during the process of ensuring orderly exit of those that fail.”
Seven banks in the country have so far been closed since 1993.
They include, Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999), The Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and the sale of Crane Bank Ltd (CBL) to dfcu (2016).