The Deposit Protection Fund (DPF) in Uganda is facing challenges due to a lack of information on depositors, according to Dr. Julia Clare Olima, the Chief Executive Officer of DPF. The fund, established to safeguard depositors’ funds in regulated financial institutions, has expressed concerns over the slow progress in paying off depositors affected by the closure of the now defunct EFC bank Ltd.
Dr. Olima highlighted the major hurdle faced by the DPF, which is the insufficient information on depositors. Despite running media campaigns since 2019 urging depositors to update their personal information with their respective financial institutions, some depositors have not complied. This has adversely affected the speed at which the fund can disburse payments to affected depositors.
To expedite the process, Dr. Olima emphasized the importance of all Ugandans with bank accounts updating their information promptly. She stressed that those depositors who provided the required information were prioritized for payment, underscoring the significance of updated depositor data.
The disclosure came during a media briefing aimed at updating the public on the progress of compensating depositors affected by the closure of EFC bank Ltd. Last month, the Bank of Uganda placed EFC Uganda Limited under liquidation and revoked its license due to violations of capitalization and governance regulations.
Under the Financial Institutions Act 2004, as amended, depositors are protected for amounts up to Shs10 million per depositor, which are to be reimbursed by the DPF. This amounts to approximately Shs2 billion.
As per the latest information provided by the DPF, 374 depositors of the recently closed EFC Microfinance Uganda Ltd have been compensated. Mr. Yusuf Mukiibi, the Director of Finance and Operations at DPF, reported that this represents 50 percent of depositors with balances not exceeding Shs10 million, with over Shs125 million disbursed by the DPF.
Despite these efforts, there are still 405 depositors yet to be compensated, amounting to Shs174 million. Additionally, Dr. Olima announced that the fund has commenced receiving and verifying information and documents of depositors holding company and joint accounts within the defunct EFC bank, indicating a step forward in addressing the information gap challenge faced by the DPF.
