Africa-Press – Uganda. Several sources say officials at the Uganda Bankers Association (UBA) and BoU were tasked to review the proposals, pending a final decision that will be presented to the Finance minister and subsequently, before lawmakers
Financial institutions and Bank of Uganda (BoU), the regulator, did not reach a final decision on the proposed increase of the paid up capital requirements following a closed door meeting yesterday.
Several sources say officials at the Uganda Bankers Association (UBA) and BoU were tasked to review the proposals, pending a final decision that will be presented to the Finance minister and subsequently, before lawmakers.
Industry players preferred anonymity, citing fear of reprimand from the regulator and their employers.
One of the key issues of contention, sources say, is the timeline to fulfil BoU’s proposal with the regulator insisting on three years while the affected financial institutions pushed for a five-year period.
The other concern for financial institutions was the amount which some banks considered “a little bit too much” but this was shot down with regulators, insisting the three-year timeframe is sufficient to raise the capital.
According to sources, the meeting aimed at briefing stakeholders, including commercial banks, credit institutions, and MDIs about BoU’s decision and to hear their concerns, but not to debate the proposals.
“This will be communicated to the relevant stakeholders,” Ms Charity Mugumya, the BoU director of communications, said when contacted.
“We welcomed the proposals and agreed to continue dialogue on specifics like period within which to comply, which aspects of the capital account in balance sheet will be considered, tax issues.
[We] also discussed plans for engagement of shareholders and overall implementation plans etc. The subject matter is not new to UBA membership. BoU had hinted on this way back severally,” Mr Wilbroad Owor, the executive director of UBA, said.
After the BoU process, the Finance minister is empowered by Section 26(5) of the Financial Institutions Act, 2004 to revise the minimum capital requirements of financial institutions by a statutory instrument on the advice of the Central Bank. This is, however, subject to approval of Parliament.
Finance minister Matia Kasaija’s known contacts were off and officials at the ministry referred us to BoU.
BoU proposals
Bank of Uganda has proposed that the paid up capital of commercial banks be increased by from Shs25b to Shs150b. For ‘credit institutions’, the central bank wants the current Shs1b increased to Shs25b and that of micro finance deposit taking institutions from Shs500m to Shs10b.
