{UAH} UGANDA: Central bank refuses to lend DFCU money, liquidity bites
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UGANDA: Central bank refuses to lend DFCU money, liquidity bites
Liquidity crisis hits dfcu bank hard, fails to secure loan from BoU
By Kagenyi Lukka, EDGE.UG
The situation at the troubled DFCU bank has gone from being worse to worst following a huge liquidity crisis that hit the bank in recent times.
According to high ranking official at the Nakasero based bank headquarters, the managing director Juma Kisami and the board of directors have run to the Bank of Uganda for a crisis meeting.
Kisami and his group requested the Central bank to put a lien on the treasury bills and help them borrow money to enable them run business.
A lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation.
"Unfortunately, they told us that they cannot allow us because we are already over exposed in the market. I tell you we have huge liquidity crisis," this bank official narrated to us.
This bank official said they ran to bank official for rescue after reaching a limit on interbank lending. The interbank lending is a process in which banks extend loans to one another for a specified term. These loans are for maturities of one week or less.
Another senior official narrated to us that the bank was too weak to manage all the branches across the country.
"These people were not interested in Crane bank business; they only wanted its bad books which were worth about shs650billion," he said.
Bank bad books are loans which are not written on balance sheet.
DFCU bank has seen massive resignations of its top management bosses including the Executive Director William Sekabembe, board member also bank's largest shareholder CEO of Arise Bv Malik Deepak who also exited the bank.
The bank lawyers in London have also reportedly advised that all money collected from written off crane bank loans should be treated as a liability after learning that it could be asked to produce it and whoever collected it face criminal offense of taking money by false pretense.
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