Commercial banks through their umbrella organisation, the Uganda Bankers Association (UBA) are set to collaborate with the Uganda Law Society (ULS) and the Judiciary on alternative dispute resolution alternatives.
In a statement, UBA chairman Fabian Kasi, during a meeting held with the Judiciary and members of the legal fraternity, said the association was undertaking initiatives aimed at addressing the challenges that affect the banking business.
“As a sector we established the Assets Reconstruction Company, a private sector-led initiative that aims to address some of the challenges facing the banking sector and stressed businesses as a result of non-performing loans,” he said, adding:
“The second initiative for us is to support the establishment of the alternative dispute resolution frame work being championed by the Uganda Law Society to address the issue of case back log, accumulated injunctions and delays in formal justice system.”
According to Mr Kasi the issue of case back log has had a significant impact on the banking sector because it affects bank’s profitability and impairs capital.
ULS president Francis Gimara welcomed the initiative and said they are happy to work with UBA to bring alive an independent private sector-led state of the art arbitration centre that would offer private mechanisms for resolving commercial disputes.
“The alternative dispute resolution frame work presents good benefits which include promotion of access to justice since access to justice but to an adequate dispute resolution process hence the impact that a fast and efficient dispute resolution frame work will have on the banking and business in general will be enormous, he said.
Mr Gimara added that the capital locked in unresolved court cases for 12 months is huge which would otherwise be available for lending to other borrowers.
The ARC is a major intervention to offer relief to banks with non-performing corporate loans as well as stressed businesses through a combination of interventions to restructure, turn around and revive stressed businesses.
