Bank of Uganda not aware of Kacita’s move to form bank

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Bank of Uganda

The central bank has said it has not received any formal application from Kampala City Traders Association even as the traders’ umbrella association announced on Friday plans to form a bank.

Speaking to Daily Monitor in Kampala on Saturday, Mr Jan Tibamwenda, the Bank of Uganda director for communications, said although BoU had no problem with the traders’ ambitions, nothing had been communicated to the regulator.

Addressing journalists in Kampala on Thusday, Mr Everisto Kayondo, the chairman of Kacita, announced that the association had fianalised its plans to form a “peoples’ bank” that would aspire for the needs of traders with less or no influence from the actions taken by the central bank. He said: “This will be a peoples’ bank and will thus operate with less or no interference by the actions of the central bank.”

The move comes on the back of an outcry that last month forced traders to close their shops blaming the central bank of conniving with commercial banks to cheat them of their hard earned cash.

The central bank in October raised key lending rates to 23 per cent before relaxing them in February to 22 per cent, forcing commercial banks to revise their interest northwards to a market average of 30 per cent.

BoU warns Kacita
However, the central bank has warned Kacita not to do anything that is outside the laws that govern the establishment of financial institutions. Mr Tibamwenda said the traders were free to start the bank as long as they were ready to meet required standards, which include among them; capital requirements of Shs25 billion and other relevant certification procedures.

According to Mr Issa Ssekitto, the Kacita spokesman, the bank to be called the “Peoples’ Bank”, would be tasked with advancing credit to members and would ensure that it gets requisite requirements for its operations. However, Mr Ssekito said policy actions taken by the central bank would not bind to the bank’s operations but actions that affect users would only be discussed by members.

When asked whether they were considering upgrading their cooperative to tier level or to establish a fully-fledged commercial bank, he said the decision will be determined by a technical team whose meetings comes to a close this week.

By Ismail Musa Ladu, Daily Monitor

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