By Marvin Ocol
The Managing Director of Centenary Bank Fabian Kasi has revealed that more than ever, banks have been very cautious in the last two years.
Uganda and the world at large have been faced by the outbreak of the Covid-19 pandemic. This meant that businesses had slow operations while others were forced out of business. The economy was hit hard and as such, businesses needed ignition.
However, Kasi says that more than ever, banks have been very cautious while approving loans given the uncertainties.
“We have been very cautious about risks. I can tell you, we are now much more cautious about risks because we know what it can do and I am sure everybody now appreciates when we say, when you come to us and apply for a loan, don’t just say you want a loan without having assessed your situation, the kind of business you are doing and without having assessed the risks that are embedded in your business,” Kasi said this on the 15.10.2021 during the Uganda Revenue Authority (URA) e-Bomba ya Business Summit 2021.
Kasi explains that “That’s why if you are coming in as a startup business for example, it is very difficult to get a loan from a commercial bank because we are not venture capitalists. As commercial banks, we don’t speculate. We don’t experiment. That’s why we always assess to understand that you are in the know of your business, whether you have done it before, whether you understand the risks involved and whether your business should be able to generate enough cash flows to meet the repayment.”
According to Kasi, banks also look into the character of the loan applicant.
“We will need to look at your character as well. Some people. Some people have the capacity but your character is bad. We assess the condition under which your business works. For example if you are in school now and you are not working, the condition is such that it will be very difficult for you to get a loan. Some people will say I have a house. We are not in the business of managing assets. That comes later. Collateral will come later,” Kasi adds, and advises businesses to “Look for other means of financing.”
“Can somebody give you a grant other than the bank? This is also an opportunity for all of us to appreciate the importance of saving. Grow your savings, you will be able to get long term capital and when you have long term capital, you will be able to address the issue of interest rate which is another frequent issue as far as financing of business is concerned,” Kasi advises.