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BoU Calls For Full Disclosure on Loans

The Bank of Uganda has clarified that every commercial bank is required to act fairly and reasonably in all dealings with its customers and not take advantage of them.
The Bank of Uganda has clarified that every commercial bank is required to act fairly and reasonably in all dealings with its customers and not take advantage of them.

 

According to Ben Sekabira, the central bank’s executive director in charge supervision, prior to a consumer choosing a product or service, the commercial bank should explain clearly in plain language the key features of the range of products and services that the consumer is interested in.

 

Sekabira says every bank has to ensure that any information given to a consumer whether in writing, electronically or orally is fair, clear and transparent. This covers benefits, prices, risks and the terms and conditions.

 

He advises customers that as they deal with banks they should not shy away from asking for everything and anything, negotiate the best terms and get the best rates. He says if possible they should delay any decision till they have rethought their moves and made the right choice.

 

Sekabira especially advises customers getting big loans to study the credit documents carefully, particularly the interest rates and payment terms, as well as seek advice before making any moves.

 

The central bank’s advice comes at a time when reports suggest many people, particularly top business people, are losing key property to commercial banks owing to the tough economic times and high interest rates.

 

In 2011 the bank of Uganda and GIZ, the German development agency, conducted a study on financial literacy and financial consumer protection which made a number of recommendations.

 

Top was that the Bank of Uganda should spearhead the development and implementation of a strategy for financial literacy focusing on, among others, financial education in schools, use of media for financial literacy, financial literacy for youth and in workplaces.

 

Christine Alupo, a Bank Examiner at the central bank, says they want to entrench financial literacy in the country by involving as many stakeholders as possible.

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