Doctor George Wilson Ssonko, the head of Financial Consumers Protection Unit at the Bank of Uganda, says the problem arises from many borrowers failing to promptly meet their obligations of loans repayment.
The exorbitant interest rates by commercial banks have been
attributed to the poor loan repayment.
Several commercial banks subject loan
applicants to paying varying interest rates that are even far higher than the
Central Bank’s lending Rate-CRB.
Dr George Wilson Ssonko, the head of Financial Consumers
Protection Unit at the Bank of Uganda, says the problem arises from many
borrowers failing to promptly meet their loan obligations with their commercial
The Central Bank has maintained the CRB at 10% since April this
year, but the different commercial banks are charging in varying ranges beyond
Dr Ssonko says that despite the raising public concerns over the
exorbitant and variable interest rates, the commercial bank operators are also
bemoaning the poor repayment habits of creditors.
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He also urged borrowers to avoid being stuck on specific financial
institutions for loans, a habit that exposes them to cheating through unfavorable
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Anjelo Mukasa, a businessman from Lwengo district says that despite
the high interests rates they are also exploited in the payment of a range of
other charges when securing private loans, which affects their earning.
He explains that many creditors are having their collateral
attached by financial institutions as a result of accruing interests rates and
additional charges on loans.
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Edward Kaliisa, the Centenary Bank Branch Manager for Masaka argued
that part of this perceived high-interest rate caters for insurance
charges which many creditors do not want to remit beyond a period of one year
Kaliisa says they also don’t intend to exploit their clients but are pushed by
the market conditions.