Cabinet directs on regulation of mobile money transactions
The Bill will regulate transactions such as mobile money and Islamic banking. FILE PHOTO.
Kampala- The Cabinet has directed the Ministry of Finance to amend the law regulating the financial institutions with the view of including regulations that govern Islamic banking and mobile money transactions.
The regulation if passed will hold those responsible for money transfer businesses in cases of breach of contract or any dubious transaction.
The new law will also regulate Islamic banking, thus widening the scope of customer choices in terms of banking.
“The government has proposed that mobile banking and money transfers (mobile money) among other innovations be regulated so as to enhance financial inclusion,” Ms Rosemary Namayanja, the minster for Information told journalists in Kampala last week Kampala.
She said: “In the new law, Islamic banking will be licensed to meet the growing need for both the local and foreign owned banks who have persistently asked Bank of Uganda to create an enabling legal environment for the new product.”
Branchless banking
The Cabinet also resolved that branchless banking be embraced as players increase their reach of banking in areas that are particularly difficult to reach or rural in nature.
The minister of Finance was also tasked to ensure that bank insurance which is subject to provisions of the insurance amendment Act 2011, be implemented by the Insurance Regulatory Authority.
In an interview Mr Jan Tibamwenda, the Bank of Uganda director communications said: “The proposals would grant existing banks the ability to offer Islamic banking products after the amendments.
He said: “Regulation of mobile money transactions needs some due diligence that has to put controlling measures at the entry level to ensure safety and sound transactions.”
However, he noted that the service was currently being regulated by BoU because it is offered in partnership with commercial banks as transfer platforms.
While commenting on the idea that telecoms could become mini banks, Mr Tibamwenda said this could not happen as their core competences is in telecommunications and not banking.
