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.