Uganda Bankers Association Statement on NPS Bill 2020

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Uganda Bankers Association Statement on National Payments Systems (NPS) Bill 2020

Press Release

Kampala- Thursday, September 16, 2021

National Payments Systems (NPS) Bill 2020

Uganda Bankers Association (UBA) has learnt of media reports to the effect that the Government plans to take depositors idle cash on dormant bank accounts under the new National Payments Systems Bill 2020 and that upon implementation, huge sections of account holders are likely to lose what government has pronounced as ‘idle money’ in bank accounts.

The said media report is misleading and works contrary to the efforts being made towards driving financial inclusion.

The National Payment Systems Act 2020 is a key piece of legislation in Uganda which among others;

regulates payment systems
provides for safety and efficiency of payment systems
regulates the issuance of electronic money
regulates payment service providers

In this Act, under Section 57; Sub Section (1), it is stated that an electronic money account that does not have a registered transaction for nine (9) consecutive months will be considered dormant. This account could be a mobile money account or a bank account. The same Act further highlights additional procedures that are then followed before unclaimed funds are finally reallocated to a consolidated fund and the subsections have been extracted as below;

(2) An electronic money issuer shall, in relation to an account referred to in subsection (1), give notice to the customer of at least one month before the period specified in subsection (l), that the electronic money account shall be suspended unless there is a transaction on the account.
(3) At the expiry of the notice referred to in subsection (2), the electronic money issuer shall block the electronic money account and shall not permit further transactions until the account is reactivated by the customer.
(4) The electronic money issuer shall within five working days after blocking of the electronic money account, give notice to the customer that the electronic money account is blocked and provide instructions on the process of reactivation of the account.
(5) Where the account is not reactivated within six months after it has been blocked, the electronic money issuer shall close the electronic money account.
(6) Upon closure of the electronic money account under subsection (5), the trustees shall transfer the balance of an electronic money account and identifying information to the central bank.
(7) The central bank shall refund any unclaimed balances to the account holder of an electronic money account or, if the account holder is dead, his or her legal representative, upon a request made within seven years after the dormant account is transferred to the central bank.
(8) The central bank shall after the expiration of the period prescribed under subsection (7), transfer the unclaimed balances to the Consolidated Fund.

The practice of transferring balances on dormant accounts to the Central Bank unclaimed balances account is a standard practice that has been in existence already and is not new.

For bank accounts, the period for declaration of dormancy is two (2 years) and the period for declaration of assets as unclaimed after dormancy (PoDAU) is eight (8) years meaning a customer has up to 10 years to reclaim their balances after dormancy.

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 referred to above.

The Central Bank of Uganda will release an official statement in the same regard and provide further guidance.

Uganda Bankers Association remains committed to contributing to the development and growth of the economy.

Communications and Corporate Affairs