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Kampala, Uganda | THE INDEPENDENT | Bank of Uganda has written to the Uganda Registration Services Bureau (URSB) advising it to amend the name Crane Bank Ltd by deleting the word “Bank” from the name in line with a Supreme Court ruling.
BoU’s decision and consequent directive are based on the ruling by the Supreme Court that dismissed the appeal by Crane Bank in Receivership against Sudhir Ruparelia and Meera Investments Ltd, which the court dismissed in July 2022.
Crane Bank in Receivership (by BoU) had appealed against the lower court rulings that would see the Bank revert to its shareholders, a position contested by the regulator, arguing that the shareholders mismanaged the bank to the detriment of the public.
In the ruling, the judges reasoned that when Crane Bank Ltd was placed under receivership and closed, it meant that it lost its license to operate as a banking institution.
“It lost its license. It’s only when and if, the appellant company commences operations as a financial institution that the supervisory role of the Central Bank would resume, with the consequence that the Financial Institutions Act Part IX (which provides for the intervention of the central bank into the management of a bank that is showing signs of mismanagement) can be applicable,” judges ruled in part.
The court also cited Section 4 (1) of the Financial Institutions Act that for any person to operate a deposit-taking business or a financial institution, they must have a license granted by the BoU.
The Central Bank now seeks to have Crane Bank Ltd cease using the word “Bank” in its name, citing Section 7 of the same Act which prohibits the use of the word unless a company is licensed and operating as a bank.
“No person other than a person licensed as a commercial bank, merchant bank, mortgage bank, or post office bank under this Act, shall except with the consent of the Central Bank— (a) use the word “bank” or any other expression, name, title or symbol indicating or likely to create the impression that the person is conducting or is authorized to conduct business as a commercial bank, merchant bank, or post office savings bank under this Act,” the Act reads in part.
The law came into existence in 2004 when Crane Bank Ltd was already a registered company, and it will be seen if it does not claim the rule that the law cannot work backward.
A similar provision in the Companies Act, for example, prohibits the words “State”, “Sovereign”, “National”, and “Uganda”, among others from being used in the name of a private entity without permission from the authorities.
However, Companies like the National Bank of Commerce were allowed to continue operating because they were formed before the law came into place.
“The purpose of this notice is to notify the public of this development and to clarify the status of that company under the Financial Institutions Act, 2004,” the BoU statement issued Wednesday says.
URSB has yet to respond to questions on how it plans to respond to the central bank’s advice.
