Micro-finance Body Investigates Bayport and Platinum Credit
Uganda Microfinance Regulatory Authority (UMRA) launched an investigation into Bayport Financial Services and Platinum Credit (U) Ltd, a countrywide money lending business after Hon. Akello Judith Franca (Woman MP; Agago District) raised an allegation that the company was defrauding civil servants in her district.
In a statement to Parliament, State Minister of Finance Hon. David Bahati informed the house of some of the findings of the investigation by UMRA who are the licencing and supervising authorities of Payroll Lenders. UMRA confirmed cases countrywide, of continued deductions even after the loan completion dates.
They however attributed it to: a) late remittance or non-remittance of monthly deductions by Local Governments (LGs) saying that in most instances, the affected civil servants dropped off the payroll for some months and as a result, their repayment instalments to the money lenders, as per the loan agreements, went into arrears.
The statement also stated that because of this challenge, the loan repayment periods for individual civil servants is affected and sometimes results into penalty interest charges. Unfortunately, these penalty charges are sometimes not disclosed to the borrowers in the loan agreements.
The authority also obtained copies of the loan agreements that the money lenders allege were entered into with the complainants prior to loan disbursement and shall forward the cases to the Uganda Police to establish whether the complainants’ signatures were forged.
UMRA also found that in some cases, the loan agreements prepared by the money lenders did not clearly specify the interest rates payable and penalties for delayed repayment or default.
The Minister, Hon. David Bahati committed government that through UMRA, it will prioritise mass sensitisation of the public on the new Tier 4 Act including the services of the Authority to address client complaints against money lenders.
He added that collaboration and coordination across all key stakeholders including Ministry of Public Service, Ministry of Finance, Ministry of Local Government, UMRA, Uganda Police and the Private sector associations.
UMRA is developing regulations and guidelines for the unique operations/activities of Payroll Lenders in Uganda. UMRA forwarded the cases involving allegations of forgery to the Uganda Police for further investigations. UMRA further warned licensed money lenders that the Authority shall take action against institutions thot continue with unfair lending practices.