Whistle-Blower, Clients Speak Out Over Lending Practices at Platinum Credit

Summary:

• A whistle-blower and clients have raised concerns about Platinum Credit Uganda’s lending practices, alleging contract opacity, premature property seizures, and excessive loan repayment demands. The government has responded to broader issues in the sector by capping moneylenders’ interest rates and urging Ugandans to use alternative funding sources.

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Last month, Red Pepper reported on a whistle-blower’s petition urging authorities to investigate the lending and business practices at Platinum Credit Uganda Limited, citing concerns warranting scrutiny.

Transparency in Contracts
The whistle-blower alleged that loan agreements at Platinum Credit contain clauses that lack transparency and fail to meet full disclosure requirements. Additionally, critical terms regarding property seizure are reportedly buried within overly complex documentation, making them difficult for borrowers to understand.

Loan Term Enforcement
The whistle-blower further claimed that properties are being seized before the stated loan terms expire, with borrowers frequently reporting inconsistent application of contract terms.

In their petition, the whistle-blower appealed to the authorities:

• To review Platinum Credit’s lending practices and documentation.
• Investigate compliance with mortgage lending regulations.
• Examine property seizure procedures.
• Establish a reporting channel for affected borrowers.

Platinum Credit Uganda Limited declined to comment on these allegations.

Customer Complaints Surface
Following the initial story, other clients have come forward to share their grievances against the financial institution.

One client recounted being persuaded to take a loan of UGX 4.6 million, with deductions made from their salary for seven months. However, upon opting to clear the balance in full, they were shocked to be asked to pay UGX 8.79 million, without any consideration for the previous payments.

Another client claimed that Platinum’s “top-up loans” serve as a trap, making it nearly impossible to settle loans. “I topped up last March to UGX 7.9 million and had already paid installments of UGX 310,000 for 19 months. When I sought to clear the balance, they demanded UGX 13 million. In total, I ended up paying UGX 19 million in less than two years,” the client said.

A separate incident involved a primary school teacher from Rukiga District, who initially borrowed UGX 3.5 million but was later persuaded to top up to UGX 5 million. Within a year, she had paid UGX 13 million, only to be asked to clear an additional UGX 7.8 million when she sought to settle the balance through Centenary Bank. In total, she ended up paying UGX 20.8 million for a loan of UGX 5 million.

Concerns at Other Institutions
Similar complaints have been raised against Premier Credit Limited, which will be covered in a subsequent report.

Government Action Against Predatory Lending
President Yoweri Museveni has expressed concerns over exploitative money-lending practices in Uganda. Highlighting the high interest rates and unethical behavior of some lenders, he called for stricter regulations to protect citizens from predatory practices.

In response, the government has issued a legal notice under the Tier 4 Microfinance Institutions and Money Lenders Act, capping annual interest rates at 33.6%, with a monthly maximum of 2.8%.

President Museveni also encouraged Ugandans to utilize Parish Development Model (PDM) funds instead of turning to money lenders. He emphasized that predatory lending practices threaten Uganda’s economic stability, underscoring the urgency for legal reforms.