Regulatory Alerts2022-06-01
Consultative Meeting on Proposed Increase in Paid-Up Capital Requirements for Commercial Banks, Credit Institutions and Micro Deposit Taking Institutions
The Bank of Uganda proposes increasing the minimum paid-up capital requirements for Commercial Banks, Credit Institutions, and Micro Deposit Taking Institutions to match economic dynamism, enhance shock absorption, and align with regional peers. The revised thresholds will raise Commercial Bank capital from USh.25 billion to USh.150 billion, Credit Institutions from USh.1 billion to USh.25 billion, and Micro Deposit Taking Institutions from USh.0.5 billion to USh.10 billion. To facilitate stakeholder feedback on these long-overdue adjustments, the regulator is hosting a virtual consultation meeting on August 26, 2021.
BANK OF UGANDA
OFFICE OF THE EXECUTIVE DIRECTOR SUPERVISION
EDS.306.2
August 20, 2021
37-45 KAMPALA ROAD, P.O. BOX 7120, KAMPALA
DIRECT LINE: 256-414-230051 GENERAL LINE: 256-414-258441 Ext 2403 FAX LINE: 256-414-258515 TELEX: 256-414-61059 CABLES: UGABANK Email: info@bou.or.ug Web site: www.bou.or.ug
Circular to all Chief Executives of Commercial Banks, Credit Institutions and Micro Deposit Taking Institutions
Consultative Meeting on Proposed Increase in Paid Up Capital Requirement of Commercial Banks, Credit Institutions and Micro Deposit Taking Institutions
In accordance with Section 26(5) of the Financial Institutions Act 2004 and Section 15 (3) of the Micro Deposit Taking Institutions Act 2003, Bank of Uganda (BOU) intends to increase the minimum paid-up capital requirements of Commercial Banks, Credit Institutions (CIs) and Microfinance Deposit Taking Institutions (MDIs).
Under the current legal framework, the paid-up capital for Commercial Banks stands at USh.25.0 billion, last revised in 2010, Shs.1.0 billion for Credit Institutions and Shs.500 million for MDIs last revised in 2004 and 2003, respectively. Consequently, the increase in paid-up capital is long overdue and is intended to match the dynamism in the economy, incentivize shareholder commitment, enable institutions to withstand shocks and to converge with regional peers among whom Uganda effectively has the lowest paid-up capital. Therefore, the proposed increase in paid-up capital requirements is as follows:
| Current | Proposed | |
|---|---|---|
| Commercial banks | USh.25.0 billion | USh.150.0 billion |
| Credit Institutions | USh.1.0 billion | USh.25.0 billion |
| MDIs | USh.0.5 billion | USh.10.0 billion |
Bank of Uganda is currently undertaking consultations with relevant stakeholders on the proposed increment. Accordingly, this is to invite you to a meeting scheduled for Thursday 26th August 2021 at 11.00a.m. via Microsoft Teams to discuss this matter. Kindly forward the names of the persons who will be attending the meeting to Mrs. Jacqueline P.N. Kigonya on jnansamba@bou.or.ug.
[Signature]
Tumubweinee Twinemanzi (Dr.) Executive Director Supervision Copy: Director Commercial Banking Director NBFI Director Financial Stability
Mission: To Foster Price Stability and a Sound Financial System | Vision: To be a Centre of Excellence in Upholding Macroeconomic Stability