The Bank of Uganda (BoU) has approved the transition of Finance Trust Bank Limited from a Tier I commercial banking licence to a Tier II credit institution licence, marking the latest adjustment within Uganda’s regulated financial services sector.
In a public notice issued on January 29, 2026, the central bank informed the general public that Finance Trust Bank has been authorised to change its licence status, with the new Tier II licence taking effect on April 1, 2026.
BoU said the bank has been granted a three month transition period running from January 1 to March 31, 2026, during which it will make the necessary arrangements to phase out products and processes that require a Tier I commercial banking licence.
The regulator noted that the transition is intended to ensure a smooth service shift for customers and to mitigate any disruption to financial sector stability.
Finance Trust Bank, in its own press release issued the same day, reassured customers and stakeholders that all services will remain available across its nationwide branch network and service points throughout the transition period.
The bank described the move as a strategic transition aligned with new opportunities in both existing and emerging business segments.
It also emphasized its commitment to compliance with all regulations and best banking practices governing Tier II credit institutions, while continuing to deliver quality service.
The announcement comes within a broader regulatory and structural evolution in Uganda’s banking industry, as highlighted in the Bank of Uganda Annual Supervision Report for June 2025.
According to the report, the central bank has in recent years tightened capital requirements for Tier I commercial banks. Under the Financial Institution (Revision of Minimum Capital Requirements) Instrument, 2022, the minimum paid up capital threshold for commercial banks was raised sharply from UGX25 billion to UGX150 billion.
This regulatory shift prompted a number of banks to take strategic decisions to transition from Tier I commercial banking to Tier II credit institution status.
Shareholders of ABC Capital Bank, Guaranty Trust Bank Uganda and Opportunity Bank Uganda opted to move into the Tier II licence class, reducing the number of licensed commercial banks in Uganda from 25 to 22, effective July 1, 2024.
BoU’s supervision report explains that Uganda’s financial sector is organised into three main tiers.
Tier I currently consists of 22 commercial banks, six of which are designated as domestic systemically important banks. Tier II comprises seven credit institutions, including one fully fledged Islamic credit institution.
These institutions do not offer current account facilities and are not part of the cheque clearing house, focusing instead on savings and time deposits.
Tier III includes microfinance deposit taking institutions and large savings and credit cooperatives.
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The movement of ABC Capital Bank, Guaranty Trust Bank and Opportunity Bank into Tier II contributed to a decline in the number of commercial bank branches and ATMs. Collectively, the three institutions operated 34 branches and 29 ATMs.
As a result, total commercial bank branches fell from 621 in 2023 to 591 in 2024/2025, while ATMs declined from 907 to 888.
Beyond capital pressures, BoU’s surveillance during the year identified other sector wide challenges, including weaknesses in asset quality and earnings performance, as well as instances of non compliance with minimum capital requirements.
Nevertheless, the regulator reported that banks overall remained profitable, supported by strong liquidity and capital buffers.
The central bank is also preparing further regulatory reforms. Work is underway to amend the Financial Institutions (Capital Adequacy Requirements) Regulations 2018 in order to incorporate Basel II and Basel III standards.
These amendments will include revisions to the definition of capital, new approaches to credit risk computation, the introduction of operational risk capital requirements, and the requirement for institutions to conduct internal capital adequacy assessment processes.
Within this evolving environment, Finance Trust Bank’s transition represents another major development in the reshaping of Uganda’s banking landscape.
Finance Trust Bank has a long institutional history rooted in financial inclusion. The bank was first registered as an NGO in 1984 under the name Uganda Women’s Finance and Credit Trust Limited, later changing to Uganda Women’s Finance Trust Limited in 1997. In October 2005, it was licensed as a Microfinance Deposit taking Institution.
In November 2013, Finance Trust Bank was granted a Tier I commercial banking licence, taking over the business of Uganda Finance Trust Limited.
Since then, the bank has built a strong presence across the country, with its headquarters at TWED Plaza on Lumumba Avenue in Kampala.
Today, Finance Trust Bank operates a network of 35 branches, including one on the Kalangala Islands, with about 70 percent of its outlets located in rural areas.
The bank currently serves more than 500,000 savers and over 29,000 borrowers, reflecting its deep reach among communities outside Uganda’s main urban centres.
As Uganda’s banking sector continues to adjust to higher capital thresholds and stronger prudential regulation, BoU has reiterated its commitment to maintaining financial stability while ensuring institutions remain well positioned to serve their customers under the appropriate licence frameworks.
