Bank of Uganda revises capital requirements for commercial banks to Shs150 billion

Bank of Uganda (BoU) has announced that come 2024, it will increase the minimum paid-up capital requirements for commercial banks to Shs150 billion and for credit institutions to Shs25 billion.

This comes hardly a year after the Central Bank increased the minimum paid-up capital requirements for commercial banks to Shs120b and credit institutions to Shs20b.

But BoU argues that to enhance the financial system’s resilience to shocks and promote financial stability, the capital requirements have to be revised again.

“Under the Financial Institutions Act, 2004 (as amended), commercial banks were required to maintain a minimum paid-up capital of UGX 120 billion, and credit institutions of UGX 20 billion by 31 December 2022. These capital thresholds will be further raised to UGX 150 billion for commercial banks and UGX 25 billion for credit institutions by 30 June 2024,” the central bank said in a statement issued on Thursday, 06 July 2023.

“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,” it added.

As the supervisor of financial institutions, the Bank of Uganda (BoU), said the implementation of the revised minimum paid-up capital requirements by commercial banks and credit institutions has been largely successful and remains on course.

As of 30 June 2023, BoU said 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 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,” BoU said.

“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,” it added.