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· Bank of Uganda’s financial stability report for June has revealed that all supervised financial institutions, except one, have granted some kind of credit relief to their clients as a measure to mitigate the impact of Covid-19 on the economy
· The reason for not granting the relief is said to be either non receipt of any applications or due to rejection of applications. This could be also because clients saw no value in restructuring
Bank of Uganda’s financial stability report for June has revealed that all supervised financial institutions, except one, have granted some kind of credit relief to their clients as a measure to mitigate the impact of Covid-19 on the economy. However, the name of the institution which has not granted the relief was not revealed by the central bank. The reason for not granting the relief is said to be either non receipt of any applications or due to rejection of applications. This could be also because clients saw no value in restructuring.
Other supervised financial institutions had by July granted credit relief of loans worth Shs5.9 trillion. The stock of loans, which were under credit relief in all banking institutions as of the end of July was Shs4.8 trillion, which is equivalent to 31.2 per cent of total loans. The apex bank earlier this year directed commercial banks to restructure individual and corporate loans as the Covid-19 induced lockdown affected businesses and economies globally.
The apex bank reveals that the acceptance level of applications by the customers was as high as 98.3%. Of the total 895,241 people who applied for relief, 893,018 got the benefits . The sectors which benefited most are manufacturing, real estate, trade and transport. A combination of reliefs was given to the applicants including declaring moratorium on repayment. The scheme kicked off in April, so far restructured Shs 2 trillion loans. Some of the business segments have already started their operations such as transport, others are still under the lockdown purview. This, the apex bank apprehends, would lead to loans turning non -performing assets. Presently, non performing assets stand at 5.8% of the total loans disbursed. This might go up if the lockdown continues and the businesses take time to restart. This, in turn, would affect the liquidity of banks and institutions, warns the apex bank.
