The Central Bank of Uganda (BoU), whose governor is Prof Emmanuel Tumusiime Mutebile, has invited Chief Executive Officers (CEOs) of commercial banks, credit institutions and Micro Deposit Taking Institutions (MDIs) to a meeting to discuss the proposed increase in paid up capital requirement for all financial institutions in the country.
In an August 20 circular BoU executive director for supervision Dr Tumubweinee Twinemanzi sent to all CEOs of commercial banks, credit institutions and MDIs, the central bank justified the proposal to increase the paid up capital.
“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),” noted Dr Twinemanzi.
“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.”
The BoU supervision boss announced that the central bank plans to increase paid up capital for commercial banks from Shs25bn to Shs150bn.
The paid up capital for credit institutions will rise from Shs1bn to Shs25bn.
For MDIs, the paid up capital will increase from Shs500m to Shs10bn.
The meeting between BoU and the financial institutions is set for August 26.
“Bank of Uganda is currently undertaking consultations with relevant stakeholders on the proposed increment,” said Dr Twinemanzi in the circular copied to the BoU director for commercial banking, director Non-Banking Financial Institutions Department (NBFI) and the director financial stability.
“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.”