The Governor Bank of Uganda, Prof Emmanuel Mutebile, has clarified that Bank account holders have a period of 10 years within which to rectify the issue of unclaimed balances on dormant accounts while Mobile Money customers have a total of 8 years and three months to reclaim their money.
The Governor’s clarification follows a backlash from the public after government announced plans to implementation provisions in the National Payments Systems Act, 2020, which among others, empowers the Central Bank to collect idle money from dormant accounts. The law regulates payment systems, provides for safety and efficiency of payment systems, regulates the issuance of electronic money, and regulates payment service providers.
In a joint statement issued, Governor Mutebile and Finace Minister Matia Kasaija said, government has no intention of taking over or taxing unclaimed balances in bank accounts or mobile money accounts, and that media reports purporting that government is trying to do so are misleading.
Quoting 119 of the Financial Institutions Act and Section 83 of the Micro Finance Deposit-taking Institutions (MDI) Act, 2003, Prof Mutebile defined a dormant account as one that has not had any activity for a period of 2 years in a Supervising Finance Institution (SFI). This includes fixed deposit accounts that have not had any activity for 2 years following the maturity date.
After two years of inactivity, the SFI transfers the said accounts to a separate register of dormant accounts in its books and a notice in writing of that action is sent to the depositor (customer) at his or her last known address.
At this point, the minister says, the public should note that any account can be transferred out of the register of dormant accounts if the depositor or, if the depositor is dead, his or her legal representative, makes such a request.
Once the dormant account has been on the register for three years, the financial institution advertises this fact in the print media before the process to collect the cash proceeds. Then, after a period of 5 years from the date of advertisement, unclaimed balance shall be transferred to Bank of Uganda.
The public should also note that Bank of Uganda shall refund any unclaimed balances with Supervised Financial Institutions, or if the depositor is dead , his or her legal representative, if a request is made aftr the dormant account has been transferred to Bank of Uganda.
As for Electronic money (Mobile Money), Section 57 of National Payment Systems (NPS) Act, 2020, defines the dormant account as one that has not had any activity for a period of 9 consecutive months, and the Mobile Money insurer (service provider) must give notice to the customer on status of the account a month before expiry of the 9 month period.
Upon expiry of nine months, the account will be suspended and subsequently blocked. Five days after blocking of the e-money account, the service provider shall send notice to the customer and provide instructions on how to reactivate the account. If the account is not activated within 6 months fatter it has been blocked, the service provider shall close the account and transfer the balance with customer identification information to Bank of Uganda.
At this point, Bank of Uganda shall pay unclaimed balances to the customer if the claim is made within 5 years. If the account owner is deceased, their legal representative or administrator of the deceased estate shall make such a claim. If unclaimed, after those 7 years, the unclaimed balances are transferred to the consolidated fund.
The Uganda Bankers Association (UBA) has also defended the practice of transferring unclaimed balances on dormant bank accounts to the Bank of Uganda (BOU) saying it’s standard practice in the financial sector.
In a statement issued last week, Patricia Amito Head Communications and Corporate Affairs at UBA said the practice has been in play even before the National Payments Systems Bill become law. She described the media reports as misleading to financial consumers.
“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.” She said.