The governor of Bank of Uganda, Emmanuel Mutebile has said that it is not mandatory for a foreign bank to establish a representative office in Uganda in order to conduct lending or non-deposit-taking activity.
Mutebile said in a wake of the recent judgment delivered by the high court justice Henry Peter Adonyo against Diamond Trust Bank.
In his ruling, justice Adonyo faulted DTB Kenya for appointing its counterpart saying it had no license to carry out financial business in Uganda as per the financial institutions act of 2004. “The act contravenes regulation number five and therefore DTB Uganda is penalized for taking part of illegal business,” he ruled.
Mutebile said Bank of Uganda’s regulatory and supervisory powers only apply to financial institution business conducted by BoU licensed entities in or outside Uganda or activity which should be licensed as such in Uganda. The powers do not extend to activities of foreign banks outside Uganda licensed by foreign regulators.
“International and Regional Development Organizations, Foreign Banks, and other Lenders both local and foreign who may choose to appoint any entity or person to act as their agent in Uganda under general contract law do not require approval from BoU. Such agencies do not fall within regulated agency under the FIA, 2004 and do not require a BoU license.”
In February 2011 and August 2018, Kiggundu sought and offered $4,014,444 and $6,974,600 loans by the banks for construction of commercial properties. To secure the loan Kiggundu mortgaged Kyadondo Block 248, Plot 328 land at Kawuku, FRV 1533, Folio 3, Plot 36-38, Victoria Crescent II Kyadondo and LRV 3176 Folio 10, Plot 923, and Block 9 located at Makerere Hill Road.
DTB Kenya contacted its counterpart in Uganda to collect a loan facility from the Business man..
In March, Ham dragged both banks to court for siphoning over sh120b from his accounts without his consent. He also wanted the court declare that the banks demand for $4,014,444 and $6,974,600, which was advanced to him by DTB-Kenya, is illegal and unenforceable on the grounds that the Kenyan bank had no license to carry out financial business in Uganda.