The Deposit Protection Fund (DPF) has revealed that it has about 20.1 billion which is supposed to be paid to shareholders and depositors of closed financial institutions upon the conclusion of liquidation processes by the Bank of Uganda (BOU)
In 2016, the Financial Institutions Act 2004 was amended to provide for the establishment of an autonomous DPF to ensure customer deposits under licensed financial institutions are protected.
This week, a group of shareholders of Greenland Bank Limited (in liquidation) dragged Bank of Uganda (BOU) to court over an unending liquidation process. But DPF noted that as and when some of the cases conclude, they have received some money to compensate depositors.
“Other items classified as liabilities include an amount worth sh20 billion which relates to monies received by the Fund when Greenland Bank, Co-operative Bank and International Credit Bank were closed. This liability will be settled after the conclusion of the liquidation process. In addition, the Fund has a liability of sh198 million in respect of unclaimed deposits payable to insured depositors,” DPF noted in a statement.
Greenland Bank has been under liquidation for 21 years now. The plaintiffs led by Sulaiman Kaweesi seek, among others, a declaration that the continued liquidation of Greenland Bank without accountability to them is irregular, unreasonable and in bad faith.
In a suit filed at the High Court, shareholders want an order issued requiring BOU to fully account for the period it has been liquidating the bank which commenced on April 1, 1999.
Shareholders are also seeking a declaration that the sale of secured and unsecured loans of the bank to Nile River Acquisition Company was unlawful, irregular and fraudulent.
They also want the sale of the properties belonging to the bank on Plot 30 on Kampala Road and Plot 66 William Street declared irregular on the basis that they were sold below the market value.
Jameson Karemani, the deputy registrar of the High Court has given the central bank 15 day to respond to the suit.
Financial Performance of DPF
The total assets of the DPF expanded by 22% or sh180 billion from sh821 billion in FY 2019/20 to sh1 trillion in FY 2020/21.
Investments in Government of Uganda treasury bills and bonds totaled to sh989 billion up from sh808 billion posted previously, and constituted 99% of total assets.
During the period under review, income from investments increased due to growth of the investment portfolio and favorable interest rate movements.
The Fund’s surplus increased by sh39 billion from sh118 billion to sh157 billion as at June 2020 and June 2021 respectively. The increase was largely on account of growth in interest income and annual premium contributions.