Banks directed to postpone loan repayment
By Angela Nyakuni
The Bank of Uganda has granted exceptional permission to commercial banks and other financial institutions it supervises to restructure loans of corporate and individual customers affected by covid-19.
According to the banks governor Prof Tumusiime Mutebile, the restructuring of the loans involves a postponement on loan repayment for borrowers at the will of the institutions for up to 12 months effective 1st April, 2020.
Mutebile has also directed all its supervised financial institutions to defer payment of all optional distributions such as dividends and bonus payments for at least 90 days effective March, 2020 depending on the evolution of the covid-19 pandemic.
He meanwhile says the pandemic has seen a depreciation of the Ugandan shillings against the US Dollar by 2.2% between February and March, 2020.
The governor has however pledged to monitor the current situation and the evolving market and macroeconomic conditions in case of any additional liquidity support if need arises.
In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that debt until it is repaid as well as to repay the principal amount borrowed.
Most people are familiar with debt as a form of financing because they have car loans or mortgages. Debt is also a common form of financing for new businesses. Debt financing must be repaid, and lenders want to be paid a rate of interest in exchange for the use of their money. Some lenders require collateral.
Meanwhile, today, April 7th, 2020 President Yoweri Museveni will address the nation at 8 pm, largely to give an update on Covid-19 pandemic in Uganda. For the first time the public will be allowed to call in and ask the president questions or propose measures. Our dear reader, what are some of the key issues that you want the president to address?