Four banks yet to meet Shs150b paid up capital ahead of June deadline
In 2021, Bank of Uganda increased paid up capital requirements for all supervised financial institutions. Photo / File
What you need to know:
- All banks have until June 30, 2024 to have met the Shs150b paid-up requirement
Bank of Uganda has said all supervised financial institutions, save for three or four banks have met the new capital requirements.
This, the Central Bank noted, was ahead of the June 30, 2024 deadline, on which all commercial banks must have met the Shs150b paid-up requirement.
Responding to questions during release of the monetary policy statement, Bank of Uganda executive director supervision Tumubweine Twinemanzi, said majority of commercial banks had already met the Shs150b capital requirements while those that had not were on course ahead of deadline.
“Largely, three to four banks have submitted their capital resolution plans to meet the deadline, but all banks remain well capitalised,” he said, noting that those that are yet to meet the requirement have six months to June 2024.
In August 2021, Bank of Uganda increased the paid-up capital requirements for all supervised financial institutions, citing the need to improve the banking sector resilience and align it with regional peers.
The increase impacted commercial banks’ paid-up capital, which rose from Shs25b to Shs150b while that of credit institutions rose from Shs1b to Shs25b. That of micro-finance deposit-taking institutions rose from Shs500m to Shs10b.
However, Dr Tumubweine said Parliament had in July reduced the capital requirement for micro finance deposit taking institutions to Shs5b.
Bank of Uganda had last revised the minimum capital requirement for banks in 2010, while that for credit institutions and micro deposit taking institutions was last revised in 2004 and 2003, respectively.
In 2021, Dr Twinemanzi had indicated that the increase in paid-up capital had been long overdue and was intended to match the dynamism in the economy, incentivise shareholder commitment, enable banks to withstand shocks and converge with regional peers.
Rwanda raised its paid-up capital in 2018 to 20 billion francs (Shs70.3b) from five billion francs (Shs17.5b), while Kenya had in 2016 increased the minimum capital requirement for commercial banks from Shs32.2b to Shs161.1b, even as lawmakers argued it would kill competition and make it difficult for small banks to grow.
