Banks endorse government plans to take idle cash on dormant accounts

KAMPALA –  The Uganda Bankers’ Association (UBA) has endorsed the government plans to take cash considered “idle or dormant accounts” in all banks.

In the new National Payments Systems Bill 2020, the government suggested that money considered idle and sitting on dormant accounts would be seized by the state.

In a statement issued by Uganda Bankers’ Association, the banks say the practice is one of the efforts made towards driving financial inclusion, adding that the legislation is key to economic recovery.

The statement reads in part that “The legislation would regulate payment systems, provide safety and efficiency of payment systems, and regulate the issuance of electronic funds among others.”

In the new legislation, Section 57, Clause (1) stipulates that an electronic account that does not have a registered transaction for nine consecutive months will be considered dormant.

An electronic account can as well be a mobile money account or a bank account, with the same Act also highlighting additional procedures followed in case of relocating the unclaimed funds.

The Uganda Bankers’ Association says the practice of transferring balances on dormant accounts to the Central Bank is standard practice that has already been running.

The Statement adds that “As a sector, we believe that enactment of the National Payments System Act 2020 will bring in more positive changes in the payment space.”

Meanwhile, the Permanent Secretary in the Ministry of Finance, also Secretary to the Treasury, Prof. Ramathan Goobi was fast enough to clarify that the government is not interested in taking depositors’ cash.

Addressing the Uganda North American Association (UNAA), in a virtual meeting, Goobi said the government is not interested in taking depositors’ cash as reported earlier to clear its debts.

“Uganda is among the few African countries with a sustainable debt portfolio. I only encourage you to come and invest back home without any fears,” he said.

According to the act, an electronic money issuer shall in relation to an account referred to in sub-section one, notify the customer or account holder at least one month before the transfer of funds is effected and subsequently, suspend the account unless a transaction on the account is made there and about.

The legislation also stipulates that at the expiry of one month, the bank or the electronic money issuer shall block the electronic money account against any further transaction until the account is reactivated by the customer.

The Act further stipulates that if the account is not reactivated within six months after it was blocked, the trustees shall transfer the balance of an electronic money account to the Central Bank.

The Central Bank shall refund the unclaimed balances to the account holder if the previous holder is dead and his legal representatives prove that upon a request within seven years and then transfer to the Central Bank.

Beyond the seven years, the Central Bank shall transfer the funds to the consolidated fund account.

Meanwhile, the Act also allows banks up to a period of two years to declare dormancy of an account, while eight years applies for unclaimed assets before the bank to declare them dormant.

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