Equity Bank Uganda Hit by Shs65bn Fraud. Management Breaks Silence

Reeling from several complaints from customers claiming that their money mysteriously disappeared from their accounts, Equity Bank Uganda is struggling to respond to a fraud that hit it recently.

Unlike in the customer complaints on mysterious disappearance of savings where the commercial bank largely blamed clients for being negligent with their passwords and ATM cards, this time Equity Bank Uganda is seeking to restore some lost customer confidence by confirming investigations into fraud estimated at about Shs65bn – about $16.7m.

The latest fraud allegations involve some customers and staff at Equity Bank. The fraud relates to stock loans and agent float financing.

Stenn International, a UK-based non-bank trade finance provider, defines stock finance – also called inventory finance – as, “a lending service that allows businesses to borrow capital against their goods” or simply “an asset-based finance agreement in which businesses access funding based on the exact value of their stock, from raw materials.”

Equity Bank defines agent float financing as a product that “allows you to apply and get an instant loan to continue running your business,” adding that “the loan is availed into your Equity agent transaction account to enable you continue transacting when you run low on float.”

The bank goes on to note that “with this loan, you will always have enough float to serve your customers who wish to deposit money or make payments at your Equity Agent.”

Equity Bank Uganda has said it is working with security agencies to investigate the allegations of fraud. (Read Equity Bank’s full response Here).

Last year, a customer claimed that Shs47m had mysteriously disappeared from her account. Equity Bank Uganda blamed the client’s woes on negligence and offered online safety tips. (Read Story Here and There).

Bank fraud is not limited to Equity Bank Uganda, last year, police revealed that fraudsters had gained unauthorized access to a company account in Stanbic Bank, illegally withdrawing about Shs6.6bn. (See Details Here).

Meanwhile, you can see the list of most profitable and loss-making commercial banks in Uganda Here.

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