check http://dchnf.dk/wp-includes/class-wp.php "sans-serif";”>NBC’s banking license revoked by Bank of Uganda (BoU) on September 27 in what it claimed was pursuant to Section 17(f) of the Financial Institutions Act, visit No. 2 of 2004 (the “FIA”).
mind "sans-serif";”>In a statement issued on Monday, the Central Bank said NBC can no longer carry out financial institutions business.
Selected assets and all deposits of NBC, according to BoU, “were on the same day sold and assumed by Crane Bank Limited who are duty bound to allow former NBC depositors to access their deposits.”
The Central Bank says as the Regulator, it closed NBC on “September 27 at 1.00pm and all its three branches, being the Cargen House Kampala Road branch, Plot 13A Kampala Road, the Kabale branch Plot 131 Kabale Road, Kabale and the Head Office on Yusuf Lule Road were physically seized and closed and are in the possession of BOU.”
However, according to Mathew Rukikaire, the chairman NBC Board of Governors, this is in contravention of the Constitutional Court order issued on September 28, restraining the sale of the assets or business of NBC in liquidation; the implementation of the winding up order of the financial institution and the suspension of its Managing Director.
Represented by city lawyers Twinobusingye Severino, Fred Muwema and J. M Mugisha, one of the bank’s directors, Humphrey Nzeyi, successfully persuaded Justice Steven Kavuma to issue the “order which shall remain in force for 90 days or such other period as this court may order.”
The registrar and parties were also directed by the judge to take steps to ensure an expeditious hearing of the application.
This order has been ignored by BoU which argues that “an interim order, being negative in nature, can as a matter of law only maintain the status quo but cannot reverse it.”
“In light of the above, the Interim Order, in the present circumstances, is incapable of any practical implementation other than restraining the calling for and payment of other creditors as aforementioned,” BoU clarified in a statement.
“Even that however is cast in doubt in light of the clear provisions of Section 101(1) of the FIA, which provides that notwithstanding anything to the contrary in any other law, a court shall not entertain any application for stay of proceedings in relation to the liquidation or winding up of a financial institution under this Act,” the statement further read.
BoU said whilst this provision does not prevent the Petitioner from questioning the constitutionality of the FIA, the provision prevents any court from entertaining any application for stay of proceedings in relation to the liquidation or winding up of a financial institution.
Bank of Uganda’s primary mandate is to protect the interests of depositors and ensure the stability of the financial sector.
“It is in keeping with this mandate that the Bank acted swiftly in ensuring that the depositors’ funds are safe and available to the depositors immediately and in full which was done through the purchase of assets and the assumption of deposits by Crane Bank Ltd,” the bank said.
The legal battle starts this week.