By Ronald Ssenvuma
The Uganda Bankers’ Association (UBA) has abolished early loan repayment charges on outstanding loans.
This means that borrowers will now not be penalized for clearing their loan obligations early after the association agreed to drop what has for a long time been regarded as an “unfair” requirement.
According to the UBA Executive Director Wilbrod Owor, this was resolved during the monthly CEOs’ meeting held on October 13, 2023.
In a press statement, Owor says the move is in response to concerns raised during the Governor’s meeting with member CEOs on August 23, 2023.
He says the CEOs’ meeting also agreed that the Bank of Uganda be notified of the decision with immediate effect and that members handle applicable communication to their customers as appropriate.
“This correspondence serves to notify you that at our monthly CEOs meeting held on Friday 13, October 2023, a decision was reached to drop/abolish the practice of early loan repayment fees charged on outstanding loans across our membership/industry,” Owor said in a statement.
The meeting further agreed that BOU be notified of this decision with immediate effect and that members handle applicable communication to their customers as appropriate.
Early repayment charges are usually calculated as a percentage of the amount still outstanding on one’s loan, usually between 1 and 5 %.
This charge is based on the loan amount charged. The amount is equal to 58 days’ interest on the amount one repays early and the actual number of days remaining.