Know thy banker!

Kadaga blames banking institutions for misleading MPs who are often taken by surprise at the willingness to provide them with huge sums of money at short notice when they have just gone through costly campaigns. But the speaker, Rebecca Kadaga, says that she attempted to advise MPs to live within their means but she was rebutted and that as a result many MPs are now at the mercy of loan sharks and banks.

 I quote from the wall of one of my face book friends. This post by my friend got me thinking about the time I read in the media that following the negative image that bankers have acquired worldwide as being responsible for the financial crisis, a man sought a court injunction stopping people from referring to him as a banker. As I contemplate the actions of this man who chose to distance himself from banks, bankers and the banking profession as a whole, I kind of see where the speaker is coming from.

You see, like many in Uganda, in the past, I had not paid close attention to the bank charges that my bankers charge me and I did learn a painful lesson. One time I noticed that the balance that I expected to have been on my account was lower than I thought it should be, so I decided to request for bank statements from my bankers covering the whole of 2010 and the first quarter of 2011. I then did a cursory study of the bank charges I was charged and to my utter surprise, I found that during a seven month period, July 2010 to January 2011, the monthly bank charges more than doubled.

This motivated me to do a detailed study of the bank charges and noted that my bank charged me for both outward transactions of money coming out of my account and for inward transactions of money coming into my account. The charges on outward transactions included: ATM withdrawal, cashing cheques at the counter, cheques drawn from account, and internal transfers to client’s other account within the bank. The charges on inward transactions included: other cheque deposit, counter cash deposit, telegraphic transfers from another bank into bank account, and internal transfer from client’s other account within the bank.

Of all the charges, only the ATM charges were clear for they were automatically charged per ATM cash withdrawal. The others were charged out in form of a fixed monthly service charge of UGX 10,000 and what was referred to as transaction charge which varied monthly. The monthly service charge was not new to me, for since I opened the account three years prior it had been charged. I had assumed that the service fee was justified on grounds that it covers such costs as the monthly transactions on the account. That is why the new transaction charges were not clear to me.

So to seek clarity, I went to one of the managers one of the bank branches that I frequented. I asked him to explain to me how the transaction charges were arrived at and he told me that it was UGX 1,500 per transaction. Then in rapid succession I asked: So, what is the service fee or? So, does it mean that the bank charges me twice, when I move money from one of my bank accounts in the same bank? So, does it mean the bank charges me for bringing money into the bank (all the charges on inward transactions)? I noticed from the facial expressions of the branch manager that he too found this charging system quite baffling. He, however, had an escape route for he explained to me that the was ‘new’ on the job and that the charges on my account were done before he had joined the bank. He however promised to forward my queries to be ‘handled’ by the bank’s audit department.

I waited for feed back from the audit department in vain. Shortly after my complaint, the bank reverted back to only charging one of the monthly fees, the transaction fee and it did not charge the service fee at the same time. I had falsely hoped that the bank would decide to refund me either the UGX 70,000 which it took from me as bank charges or UGX 51,000 which it took from me as transaction charges during the seven month period. It never did to the day that I closed all my accounts with it. So, I made triple losses – account opening charges, exorbitant charges during the time the accounts were open, and UGX 20,000 for closing each of the three bank accounts!

Lesson 1: It is important for one to pay attention to what bankers are doing with the money that one has given the bankers to hold in trust. Clearly, if one does not do so, one is bound to pay for it, as I did.

Lesson 2: It is even more important for one to pay particular attention to what bankers are charging for lending them other people’s money.

So, when I hear people opening bank accounts, in order to collect prize winnings of UGX 50,000 or less; or that members of parliament are rushing to acquire loans from banks; or that people are rushing to transfer their loans from one bank to another; I wonder if they have taken the time to know they banker!

Obviously, our MPs do not take the time to know thy banker. They colluded with the executive arm of the Government of Uganda to take billions from the government coffers to pay off their bad debts. Clearly these members of parliament without money sense and who are stealing from government coffers in broad day light to leverage a lifestyle beyond their means shouldn’t be in the position accorded the prefix ‘honourable’. After all, very soon when the debt collectors catch up with them, they will be frog jumped out of parliament.

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7 comments

  1. Breaking news – one of the MPs has actually gotten arrested for failure to pay back her debts … this is really a serious vice … read more http://www.monitor.co.ug/News/National/Gombe-Woman-MP-sent-to-Luzira-prison-over-debt/-/688334/2431514/-/u0i8mwz/-/index.html

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  2. Presumably, one receives a disclosure of all fees and charges, in writing, from the bank when one opens a bank account in Uganda? Are the banks also obligated to informing you of their intention to make any changes to this agreement? My old friend Philip and James could perhaps embark on a bank rating system, for the common man, based on, among other things, transparency and actual magnitude of these fees and charges. It is also bothersome that may folks with the responsibility on making financial decisions on behalf of the nation are they themselves financially illiterate.

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    1. Yes, Victor. It all centres around financial literacy. Many are financially illiterate, the banks know that and so they exploit them to the maximum …

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  3. To add salt to the wound, so to speak, Mr. James Abola has posted this comment on my face book wall: “Norah Owaraga, yesterday my other friend Phillip Karugaba asked what I could do for the apparent financial literacy need of MPs. As I told Phillip during the orientation of the current parliament I was asked twice to prepare financial literacy presentations and on both occasions I was left hanging without saying a word. I therefore tend to agree with the Rt Hon Speaker that her colleagues are impervious to good financial counsel – and it is a pity to see a similar cycle repeated in every parliament.”

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  4. ojilong · · Reply

    Norah this has clearly been one your most treasured lesson to some of us who have three bank accounts. I have never minded to know how much these banks collect from my savings and salary accounts. Now will pay a visit to one that holds my savings and see if they are eating into it or helping me actually. Thank you for this lesson. A wise persons learns from others’ experiences while a fool will wait to learn from his experience. No pun meant on you but i have gotten some financial Audit tips

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    1. Eyalama, thank you! And you really need to ask why you as an individual person needs all the three bank accounts …

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  5. And more over there is plenty of useful advice available – but perhaps because it is in good books such as James Abola’s “Make sense of your money” that is why our MPs miss it. James as assured me that in the book ‘banking and debt is excellently covered.” The book is readily available at Aristoc and for us with e-readers there is an ebook version as well.

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