The Independent Uganda: You get the Truth we Pay the Price
A time or term deposit is an interest-bearing bank deposit account that has a specified date of maturity, where a customer is paid interest for putting their money there. The deposited funds must remain in the account for the fixed term to receive the stated interest rate.
In total, there is sh16 trillion in the bank accounts in 2019 with about sh8.2 trillion held on-demand deposit accounts where Ugandans can just walk in the bank and withdraw at any time.
According to the Bank of Uganda’s annual report 2019, banks are able to lend out much of this money. The amount being saved on bank accounts is more than what Ugandans saved in the 1990s, according to Dr Adam Mugume, the executive for research at the Central Bank.
Mugume said that in the 1990s, Ugandans held more currency and few were willing to put it on the accounts in the banks for a long time because they feared a bank could collapse with their money. This fear has majorly waned.
In the 1990s and early 2000s, Uganda’s banking industry suffered several bank failures with at least eight banks failing in that period, forcing the Bank of Uganda (BOU) to intervene. Some of the banks were closed, while others they were sold to new owners.
According to a paper by BOU Governor Emmanuel Tumusiime-Mutebile, the primary cause of most of these banks failure was poor corporate governance. Since the turn of 2010, only two banks – Global Trust and Crane bank have failed, showing immense improvement in management of the financial sector.
In September, the government increased the amount that is protected under the Deposit Protection Fund (DPF) from 3 to 10 million Shillings. This means that if a bank collapses and you had deposited there 10 million, all your money will be refunded from the fund.
Finance Minister Matia Kasaija said it was only prudent that the government increases such a fund to protect people putting their money on bank accounts.
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