Micro Finance Deposit-Taking Institutions (MDI) Regulations No. 61

Uganda

(enacted in 2004)

Micro Finance Deposit-Taking Institutions (MDI) Regulations No. 61 of 2004, issued by the Bank of Uganda, address 1) licensing, 2) liquidity and funds management, 3) capital adequacy, 4) asset quality, and 5) reporting for microfinance deposit-taking institutions in Uganda.

1) Licensing: The regulations on licensing address information and guidance on the conditions to be fulfilled by an applicant in order to obtain a license from the central bank to engage in microfinance in Uganda. These regulations consist of the following sections:

  • Part I Preliminary: defines language within the regulations and explains the purpose and objectives of the regulations;
  • Part II Licensing Requirements: explains the licensing criteria for these institutions;
  • Part III Licensing Procedure: includes information on applying for a license, the interview process, review of the management information and internal control systems, and other matters related to licensing; and
  • Part IV Revocation of License: provides information on the expiration and revocation of a license.

2) Liquidity and Funds Management: The liquidity and funds management regulations include the following parts:

  • Part I Preliminary: defines language within the regulations and the purpose and objectives of the regulations;
  • Part II Regulatory Requirements: includes information on liquid asset requirement, internal policies and funds management, the role of Board of Directors, the role of management, and the liquidity management process; and
  • Part III Remedial Measures and Administrative Sanctions.

3) Capital Adequacy: The capital adequacy regulations consist of three sections:

  • Part I Preliminary: defines language within the regulations and explains the objectives and purpose of the regulations;
  • Part II Regulatory Requirements: provides the capital requirements for microfinance deposit-taking institutions, which is not less than five hundred million Uganda shillings, and the computation of capital adequacy; and
  • Part III Remedial Measures and Administrative Sanctions.

4) Asset Quality: The asset quality regulations consist of the following four parts:

  • Part I Preliminary: defines language within the regulations and the purpose and objectives of the regulations;
  • Part II Regulatory Requirements: discusses non-performing credit facilities, income recognition, and classification and provision of credit facilities;
  • Part III Inspections by the central bank and External Audits: explains the power of the central bank to undertake inspections, which may include determining whether non-performing credit facilities have been accurately reported and that interest accrual is in compliance with these regulations, and addresses the establishment of a loan portfolio accrual system; and
  • Part IV Remedial Measures and Sanctions.

5) Reporting: The reporting regulations are comprised of the following three sections:

  • Part I Preliminary: defines language within the regulations and the purpose and objectives of the regulations;
  • Part II Regulatory Requirements: addresses the submission of financial statements, required returns, verification of accuracy of required returns, inspection by the central bank, and verification by an external auditor; and
  • Part III Remedial Measures and Administrative Sanctions.