KAMPALA-Bank of Uganda (BoU) has announced that it will increase the minimum paid-up capital requirements for commercial banks to Shs150 billion and for credit institutions to Shs25 billion in 2024.
The announcement comes shortly after the Central Bank increased the minimum paid-up capital requirements for commercial banks to Shs120 billion and credit institutions to Shs20 billion in December 2022.
However, BoU argues that the higher minimum paid-up capital requirements are intended to enhance the financial system’s resilience to shocks and promote financial stability and advance the capacity of the financial institution to meet the growing needs of a dynamic economy.
“Under the Financial Institutions Act, 2004 (as amended), commercial banks were required to maintain a minimum paid-up capital of Shs120 billion, and credit institutions of Shs20 billion by December 31,2022. These capital thresholds will be further raised to Shs150 billion for commercial banks and Shs25 billion for credit institutions by June 30,2024,” the central bank revealed 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 June 30, 2023, BoU said the 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 stated.
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.
