The Bank of Uganda (BoU) has taken a decisive step by placing EFC Uganda Limited, a microfinance deposit-taking institution, under liquidation and revoking its license. T
he central bank has instructed the institution to wind up its operations due to significant undercapitalization and poor corporate governance that jeopardize the interests of depositors.
Central Bank Deputy Governor Michael Atingi-Ego explained in a statement that the decision, made under the Microfinance Deposit-taking Institutions (MDI) Act, 2003, was necessary given EFC Uganda’s weak financial position. The central bank emphasized that the institution’s continued activities posed risks to depositors.
Atingi-Ego stated, “This action has been taken because the Bank of Uganda has determined that the continuation of EFC Uganda Limited’s activities is detrimental to the interests of its depositors due to the institution’s failure to resolve its significant undercapitalization and poor corporate governance.”
The Bank of Uganda, along with the Deposit Protection Fund of Uganda, will communicate the arrangements to depositors for accessing their funds. Other creditors are urged to submit claims within 30 days to the Office of the Director of Financial Stability, Bank of Uganda.
The deputy governor emphasized that borrowers of EFC Uganda Limited must continue servicing their loan obligations at Bank of Uganda offices and branches. Additionally, any person in possession of EFC Uganda Limited’s property is instructed to deliver it to the Bank of Uganda.
The central bank invoked Section 69 of the Act, preventing the enforcement of security over the institution’s property and restricting legal proceedings against it. All inquiries are directed to the Bank of Uganda.
EFC Uganda Limited had recently closed several business service centers within the Greater Kampala Metropolitan Area as part of a strategic decision to streamline operations and leverage partnerships in the banking sector. The institution was licensed and supervised by the Bank of Uganda, catering to microfinance needs in Uganda.
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