The Uganda Bankers’ Association (UBA) has decided to abolish early repayment fees, also referred to as charges, for loans across its member banks. This decision was conveyed in a correspondence dated October 16, 2023, addressed to the Bank of Uganda Executive Director responsible for Supervision.
The move signifies a shift in the banking industry, as borrowers will no longer face penalties for clearing their loan obligations ahead of schedule. The practice of imposing these fees, which has long been viewed as “unfair,” is now set to be phased out.
The notification sent by UBA to the Bank of Uganda Executive Director, and copied to the Deputy Governor and all UBA member CEOs, outlined the decision made during the monthly CEOs meeting on October 13, 2023. The correspondence read, “This correspondence serves to notify you that at our monthly CEOs meeting of October 13, 2023, a decision was reached to drop/abolish the practice of early repayment fees/charges on outstanding loans across our membership/industry.”
This move by the Uganda Bankers’ Association is expected to have a significant impact on the financial landscape, as it eases the financial burden on borrowers and enhances transparency in loan repayment processes. The decision represents a positive step toward fair and equitable lending practices within the banking sector.
