What next for Uganda’s undercapitalised banks?  As of 31st December 2022, out of the 25 banks, 10 banks didn’t meet the thresholds on share capital while another 10 did not meet the thresholds on core capital. Seven (7) banks did not meet both. They have until the end of June 2023 to beat the deadline for the first phase of recapitalisation. They have 4 options⏤comply, downgrade their license, find a buyer or exit the market.

On the 16th of November 2022, the Financial Institutions (Revision of Minimum Capital Requirements) Instrument 2022 was signed into law by Uganda’s Minister of Finance, Planning and Economic Development (MFPED), Hon. Matia Kasaija. The instrument increased the minimum capital requirements for banks by  6 times or 500% from UGX25 billion (USD 6.7 million)  to UGX150 billion (approx USD 40.2 million). The increment would however be tiered, starting with a minimum capital buffer of UGX120 billion (USD32.2 million) by the 31st of December 2022 and then UGX150 billion by the 30th of June 2024.  Commercial banks are also required to have…