By Spy Uganda
Kampala: Uganda Bankers Association (UBA) has released a statement in regard to the recent declaration of the Government of plans to take depositors idle cash on dormant bank accounts under the new National Payments Systems Bill 2020 that will see huge sections of account holders losing what government has pronounced as ‘idle money in bank accounts.
Now, according to the statement issued by the UBA, the government’s initiative is one of the positive efforts being made towards driving financial inclusion noting that the National Payment Systems Act 2020 is a key piece of legislation in Uganda which among others;
1. regulates payment systems
2. provides for safety and efficiency of payment systems
3. regulates the issuance of electronic money
4. regulates payment service providers
UBA further notes that in this Act, under Section 57; Sub Section (1), an electronic money account that does not have a registered transaction for nine (9) consecutive months will be considered dormant.
UBA adds that such an account could be a mobile money account or a bank account. The same Act further highlights additional procedures that are then followed before unclaimed funds are finally reallocated to a consolidated fund and the subsections have been extracted as below;
(2) An electronic money issuer shall, in relation to an account referred to in subsection (1), give notice to the customer of at least one month before the period specified in subsection (l), that the electronic money account shall be suspended unless there is a transaction on the account.
(3) At the expiry of the notice referred to in subsection (2), the electronic money issuer shall block the electronic money account and shall not permit further transactions until the account is reactivated by the customer.
(4) The electronic money issuer shall within five working days after blocking of the electronic money account, give notice to the customer that the electronic money account is blocked and provide instructions on the process of reactivation of the account.
(5) Where the account is not reactivated within six months after it has been blocked, the electronic money issuer shall close the electronic money account.
(6) Upon closure of the electronic money account under subsection (5), the trustees shall transfer the balance of an electronic money account and identifying information to the central bank.
(7) The central bank shall refund any unclaimed balances to the account holder of an electronic money account or, if the account holder is dead, his or her legal representative, upon a request made within seven years after the dormant account is transferred to the central bank.
(8) The central bank shall after the expiration of the period prescribed under subsection (7), transfer the unclaimed balances to the Consolidated Fund.
As a result therefore, UBA says that the practice of transferring balances on dormant accounts to the Central Bank unclaimed balances account is a standard practice that has been in existence already and is not new.
For bank accounts, the period for declaration of dormancy is two (2 years) and the period for declaration of assets as unclaimed after dormancy (PoDAU) is eight (8) years meaning a customer has up to 10 years to reclaim their balances after dormancy.
”As a sector, we believe that the enactment of the National Payments Systems Act, 2020 will bring about more positive changes in the payment space and therefore call upon bank customers and the general public to disregard the sentiments portrayed in the media reports referred to above,” says UBA in their statement.