Bank of Uganda (BoU) in its Monetary Policy Statement of April 06, 2020, made reference to credit relief measures to mitigate the adverse effects of the COVID-19 pandemic, ensuring financial sector stability, and facilitating the financial intermediation process during this pandemic period.
However, in a statement issued on Monday, BoU, warned that the credit relief measures, do not eliminate the debtor’s obligation to repay borrowed funds.
According to BoU statement, the credit reliefs have been extended to borrowers of Commercial Banks, Credit Institutions, and Microfinance Deposit Taking Institutions (MDIs) supervised and licensed by BoU.
The allowable credit relief measures and terms thereof include:-
Repayment holidays for a maximum of 12 months, loan tenor extensions, and any other forms of debt restructuring covered in existing Regulations.
A statement signed Adam Mugume (PhD), For: Deputy Governor, the Bank of all Banks notes that ‘‘these credit reliefs shall only be granted within the 12 month period with effect from April 01, 2020’’
Prof. Mugume explains that Consumer protection remains paramount, and any credit relief(s) offered must be in the best interest of customers, and with full disclosure.
He however says the decision to offer a credit relief to a customer or decline a request for a credit relief from a customer is the responsibility of the Supervised Financial Institution (SFI).
The central Bank has also called on Borrowers to request, and SFIs may offer, credit relief. ‘ ‘In either case, the borrower must consent to any credit relief granted. The credit status at the time of granting a repayment holiday shall remain unchanged for the duration of the said repayment holiday.
Effective 10th April 2020, Bank of Uganda also suspended for 12 months prepayment of arrears as a condition for restructuring a credit facility
The Bank has also assured the public of its commitment to safeguard financial sector stability, promising not only to monitor ‘‘these credit relief measures’’ but also ready to issue additional measures as risks from the COVID-19 pandemic evolve.