By Our Business Correspondent
DAILYNEWS UG |Kampala, Uganda|DFCU bank bought duplicated loans from crane bank, MPs on the House Committee of Commissions, Statutory Authorities and State Enterprises have learnt.
Close to 5,000 loans that were taken over by DFCU Bank from Crane Bank are duplicated. This is according to preliminary findings by auditors attached to Parliament’s committee on Commissions, Statutory Authorities and State Enterprises (COSASE).
Crane Bank Limited was closed on October 30, 2016. Central Bank Governor Emmanuel Tumusiime Mutebile said the action was taken upon a determination that Crane Bank was a significantly under-capitalized institution and posed systemic risks to the stability of the financial systems in the country.
Mutebile stated back then that the continuation of Crane Bank activities was detrimental to the interests of its depositors because the bank had fallen below the 50 percent of the statutory requirement of 25 billion Shillings. He added that the problem was partially caused by a number of bad and doubtful loans that could have undermined the performance of the bank.
Four months after the closure, the Central Bank entered into a purchase of assets and assumption of liabilities agreement with DFCU Bank for a deferred payment of 200 billion Shillings for the Crane Bank’s loan portfolio. DFCU has so far made a payment of 98.9 billion Shillings of the money which is expected to be cleared in 36 months.
But the Chairperson of the Parliamentary committee on Commissions Abdu Katuntu says that a review of a CD presented by the Central Bank has so far indicated duplication of account loans and advances which were transferred to DFCU Bank. The CD contains details of the Crane Bank bad book which was sold to DFCU.
Katuntu said that it would be difficult for his committee to proceed with investigations until the auditors exhaust the documents on the CD and avail a comprehensive report on the matter.
This was after preliminary findings by auditors attached to the committee revealed that 4,458 loans Crane Bank loans sold to DFCU Bank were heavily duplicated.
Crane Bank Limited was closed on 30th October 2016 due to under capitalisation and according to the Governor Bank of Uganda, Prof Emmanuel Tumusiime Mutebile, Crane Bank capital had fallen below the 50 percent legal requirement under the law.
The committee Chairperson Abdu Katuntu has told the committee that it would only be appropriate to give more time to the auditors to dig deeper into the matter.
The committee has adjourned hearings to Wednesday, as they wait for a comprehensive report.