Bank of Uganda has closed EFC Uganda Limited, a microfinance company due to poor financial standing.

The action is based on Sections 72 (1) and 12 (1) (d) & (g) of the Microfinance Deposit-taking Institutions (MDI) Act, 2003 as amended.

BOU’s decision which also places EFC Uganda Limited located on Kira Road under liquidation also revoked its license, and ordered the winding up of its affairs effective today, Friday.

“Bank of Uganda has determined that the continuation of EFC Uganda Limited’s activities is detrimental to the interests of its depositors due to the institution’s failure to resolve its significant undercapitalization and poor corporate governance,” says BoU Deputy Governor, Michael Atingi-Ego.

The regulator says that it will, together with the Deposit Protection Fund of Uganda inform depositors of the arrangements that will be put in place to enable them to access all of their deposits. All those who have claims will submit them to BOU.

“All other creditors are requested to submit their claims to the Office of the Director Financial Stability, Bank of Uganda within 30 days from the date of this statement,” says the statement from BOU.

Atingi-Ego adds that all borrowers of EFC with outstanding loans and advances must continue to service their loan obligations by making payments at Bank of Uganda offices and branches.

While urging any person or company holding EFC’s property to hand it over to the Central Bank, the Deputy Governor urges no action be brought against the company about this development.

“By Section 69 of the Act no steps may be taken by any person to enforce any security over the property of EFC Uganda Limited (MDI) and no other proceedings or execution of a legal process may be commenced or continued against the institution or its property,” he says.

Last year, Parliament recommended a minimum capital requirement for Tier 3 MDI of 5 billion shillings, instead of the 10 billion that had been recommended by BOU to ensure a stronger financial industry.