EFC closure: 24% of depositors under Sh. 10m unpaid; given May 31 deadline to process payments

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After four months since EFC Uganda Limited shut down, 24% of depositors whose deposits are under the Shs 10 million insurance limit have not been paid.

The Bank of Uganda, on January 19, 2024 commenced the liquidation process for EFC Uganda Limited, revoked its license, and ordered the cessation of its operations.

The Central Bank closed EFC after it concluded that the company’s operations were detrimental to its depositors’ interests. This action was taken after EFC failed to address its significant undercapitalization and inadequate corporate governance.

EFC’s closure required the Deposit Protection Fund of Uganda (DPF), a governmental entity responsible for insuring deposits of customers from institutions licensed by the Bank of Uganda, to commence the refund process for EFC depositors.

According to Sections 111A and 111C (5) of the Financial Institutions Act 2004 as amended, the Deposit Protection Fund will pay the protected deposits while Bank of Uganda as statutory liquidator of EFC Uganda Limited, will pay the unprotected deposits.

Protected deposits refer to funds kept in financial institutions that are safeguarded by government-backed deposit insurance schemes. These schemes are designed to ensure the protection of depositors’ funds up to a defined threshold in case of a financial institution’s closure.

On the other hand, uninsured or unprotected deposits lack this safeguard, exposing depositors to higher risks of loss in the event of a bank or financial institution failure.

In Uganda, the deposit insurance limit is set at 10 million shillings. This means that in case of a bank closure, depositors can reclaim up to 10 million shillings of their deposits. Those with balances of 10 million shillings or less will receive their entire deposit amount.

Accordingly, the Central Bank and the DPF implemented mechanisms to expedite the repayment process for depositors of EFC Uganda Limited.

The DPF announced that depositors with protected deposits up to 100,000 shillings would be paid via mobile money starting January 29, 2024, following verification of their National Identification Number (NIN) and mobile phone numbers.

All other depositors with balances up to 10 million shillings (the deposit insurance limit) would be paid from February 5, 2024, through an Agent Bank to be communicated.

After four months since the EFC closed, 24% of depositors with amounts under the 10 million shillings insurance limit have not received their payments yet.

“The Deposit Protection Fund of Uganda (DPF) informs the public that as of April 24, 2024, 76% of the insured depositors of the closed EFC Uganda Limited had been paid,” the DPF CEO, Julia Clare Olima Oyet announced.

“All payments previously handled at Stanbic Bank, Lugogo Branch will henceforth be processed at the DPF offices on Level 6, AHA Towers, Plot 7 Lourdel Road. All eligible depositors are requested to come to the DPF offices during working hours to process their payments before May 31, 2024,” she added.

Mrs Oyet also assured the public that their deposits in banks regulated by Bank of Uganda are protected up to the insured limit of 10 million shillings, encouraging confidence in banking.


Depositors whose deposits exceed the 10 million shillings deposit protection limit may face a risk of losing the portion of their deposits that exceeds this limit in the event of a bank failure or closure.

The Deposit Protection Fund offers insurance coverage up to a maximum of 10 million shillings per depositor per bank. So, if for example you have a combined total of 50 million shillings in savings and current accounts within the same bank, only 10 million shillings is protected by the DPF. In case of the bank’s closure, this guaranteed amount (10 million) will be paid out to you.

Deposits that surpass the 10 million shillings limit become deposits without insurance coverage. In the case of EFC Uganda Limited, deposits exceeding 10 million shillings will only be reimbursed after the remaining assets of EFC are liquidated.

This implies that depositors holding deposits exceeding 10 million shillings will need to wait until EFC’s assets are liquidated.

However, it’s crucial to understand that the recovered amount might be significantly reduced or lost entirely, depending on the bank’s financial state. The reimbursement for depositors with deposits surpassing 10 million will depend on the extent of the assets recovered.

Additionally, the liquidation process can be lengthy. It might take months or even years to obtain any reimbursement for deposits lacking insurance coverage, with no guarantee of full recovery.

To mitigate this risk, depositors often choose to distribute their savings among several banks. This approach guarantees that no single bank holds more than the deposit protection limit (10 million shillings) of their deposits, thus maximizing their insurance coverage.

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