Bankers reject law
Mar 06, 2008
Bankers have rejected the Land Amendment Bill, saying it increases the risk of doing business.
By B. Among, P. Kiwuuwa
and M. Tebajjukira
Bankers have rejected the Land Amendment Bill, saying it increases the risk of doing business.
Members of the bankers association on Wednesday called for the scrapping of provisions intended to compel banks to seek court orders before they can evict loan defaulters who use their land as collateral.
The association’s executive director, Emmanuel Turyamuhika, told the parliamentary legal and physical infrastructure committees that is scrutinising the proposed law that if the Bill were passed as it is, banks would not accept land as security for loans.
“Section 3 of the Bill limits the price at which the bank could sell a piece of land used as security because it assigns the first option of buying the land to the lawful tenant,†argued Turyamuhika.
“Seeking court orders before banks can evict loan defaulters causes unnecessary delay because court systems are lengthy,†said Phillip Karugaba, the legal officer.
They argued that the Bill contradicts the Central Bank guidelines and sections of the Mortgage Act that gives banks the authority to evict a defaulter upon the expiry of a 30-day notice.
Sections 32 (a&b) of the Bill limits the ground for eviction to non-payment of rent and eviction can only be effected through a court order.
Karugaba noted that currently, if a client fails to clear a loan with a bank, the institution does not need to seek court redress to evict that person.
and M. Tebajjukira
Bankers have rejected the Land Amendment Bill, saying it increases the risk of doing business.
Members of the bankers association on Wednesday called for the scrapping of provisions intended to compel banks to seek court orders before they can evict loan defaulters who use their land as collateral.
The association’s executive director, Emmanuel Turyamuhika, told the parliamentary legal and physical infrastructure committees that is scrutinising the proposed law that if the Bill were passed as it is, banks would not accept land as security for loans.
“Section 3 of the Bill limits the price at which the bank could sell a piece of land used as security because it assigns the first option of buying the land to the lawful tenant,†argued Turyamuhika.
“Seeking court orders before banks can evict loan defaulters causes unnecessary delay because court systems are lengthy,†said Phillip Karugaba, the legal officer.
They argued that the Bill contradicts the Central Bank guidelines and sections of the Mortgage Act that gives banks the authority to evict a defaulter upon the expiry of a 30-day notice.
Sections 32 (a&b) of the Bill limits the ground for eviction to non-payment of rent and eviction can only be effected through a court order.
Karugaba noted that currently, if a client fails to clear a loan with a bank, the institution does not need to seek court redress to evict that person.