Banks disbursed loans worth UGX 2.2 trillion in the first quarter of FY 2020-21

Kampala, Uganda | THE INDEPENDENT | A report by the Ministry of Finance, Planning and Economic Development indicates that banks gave out loans worth 2.65 trillion shillings to the private sector in the first quarter of the financial year 2020/2021.

The pre-election economic and fiscal update issued by Moses Kaggwa, the acting director economic affairs says that the approved and disbursed loans led to a cumulative stock of 17.221 Trillion Shillings in September 2020.

This translates into a growth of 1.4 percent in the stock of outstanding private sector credit over the quarter.

Kaggwa attributes the growth in credit to partly, the easing of prudential regulations by the Central Bank to mitigate the adverse impact of Covid-19 pandemic on lenders and borrowers.

“Such interventions included the issuance of waivers on limitations associated with the restructuring of credit facilities, and providing exceptional liquidity assistance for a period of up to one year to financial institutions supervised by Bank of Uganda that may require it,” he says.

As of September 2020, Ministry of Finance says that Non-Performing Loans (NPLs) to total gross loans stood at 5.15 percent, a reduction from 6.01 percent recorded in June 2020.

The report release is hinged on the provisions of the  Public Finance Management Act (PFMA) 2015 under Section 19 (1) (a) that requires the Minister of Finance to publish a pre-election economic and fiscal update not earlier than four months before the polling day for a general election.

This report by the Ministry of Finance follows another recently released by the Bank of Uganda (BoU) on the Quarterly Financial Stability Review. This indicated that banking institutions had from April 2020 to September 2020 restructured loans with clients worth 6.7 Trillion Shillings after repayments were affected by the Covid-19 pandemic.

The Central Bank in April 2020 granted permission to all banking institutions to provide credit relief through the restructuring of loans of both corporate and individual customers who were or would be affected by the COVID-19 pandemic.

The objective was to safeguard financial stability and alleviate the impact of the COVID-19 pandemic on the financial sector and economic growth. The benefiting sectors from the credit relief include that of trade, real estate, manufacturing and transport which were the hardest hit by the pandemic.

*****

URN

Share on:

WhatsApp

The post Banks disbursed loans worth UGX 2.2 trillion in the first quarter of FY 2020-21 appeared first on The Independent Uganda:.

from The Independent Uganda: https://ift.tt/3s1d8ad