Banks moving towards meeting new paid-up capital requirement, says BoU
KAMPALA – According to Bank of Uganda [BoU], the implementation of the revised minimum paid-up capital requirements by commercial banks and credit institutions has been largely successful and remains on course.
This is after Finance Minister Matia Kasaija in exercise of his powers under the Financial Institutions Act, 2004 [as amended], issued the Financial Institutions [Revision of Minimum Capital Requirements] Instrument, 2022, on December 16, 2022, thereby revising the minimum capital required for a financial institution licence operating in Uganda.
Under the instrument, commercial banks were required to maintain a minimum paid-up capital of Shs 120 billion, and credit institutions of Shs 20bln by 31 December 31, 2022.
BoU further says the capital thresholds above will be further raised to Shs 150bln for commercial banks and Shs 25bln for credit institutions by June 30, 2024.
“The higher minimum paid-up capital requirements are intended to enhance the financial system’s resilience to shocks, promote financial stability, and advance the capacity of the financial institution to meet the growing needs of a dynamic economy,” said BoU in a recent public notice.
“The As of 30 June 2023, majority of the supervised financial institutions including those deemed large and critical to the smooth functioning of the financial system, complied with the revised capital requirements,” the Central Bank said.
The Central Bank added that remaining financial institutions had put in place credible capital restoration plans whose implementation was significantly advanced, and on course to achieve complete compliance with the revised capital requirement within agreed timelines,
“The BoU is confident that attainment and maintenance of the revised minimum capital by financial institutions, will promote a strong, stable, and sustainable financial sector.”
BoU supervises about 25 commercial banks which fall under the umbrella of Uganda Bankers’ Association.
While presenting their financial statements for the year ended December 31, 2022, some of the commercial banks reported they were ahead of the June 30, 2024 deadline to raise the new Shs 150bln paid-up capital requirement.
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