Financial Crime World

Uganda Grants First Islamic Banking License to Salaam Bank Uganda

Kampala, Uganda - The Bank of Uganda has made history by granting the first Islamic banking license to Salaam Bank Uganda, a subsidiary of a Djibouti-based bank. This significant milestone marks a new chapter in Uganda’s financial sector, bringing with it more competition and innovation.

Regulatory Framework

The Bank of Uganda has been working tirelessly to develop a regulatory framework that supports the growth of Islamic banking in the country. The National Payments Act, enacted in 2020, provides for the regulation of payment systems and electronic money issuance. Additionally, the new National Payment Systems (Amendment) Regulations 2022 have been introduced to provide for licensing fees and annual fees.

Strategic Plan

The Bank of Uganda has launched a five-year strategic plan (2022-2027), which aims to promote price stability and a sound financial system in support of socio-economic transformation in Uganda. The strategic objectives include:

  • Enhancing stakeholder confidence
  • Enhancing price stability
  • Enhancing financial system development

Consumer Protection

To promote consumer protection, the Bank of Uganda has developed a regulatory framework for national payments systems. Furthermore, the Sustainability Standards and Certification Initiative (SSCI) of the European Organization for Sustainable Development (EOSD) has been launched to engender sustainability in the Bank of Uganda.

Waiver of Early Repayment Charges

The Uganda Bankers’ Association has suspended the practice of early loan repayment fees (prepayment penalties) charged on outstanding loans. This decision is set to take effect on 1 December 2023, and is expected to promote loan buyouts.

Islamic Banking in Uganda

With the granting of the first Islamic banking license, Salaam Bank Uganda is poised to offer sharia-compliant financial products and services to customers in Uganda. The bank is expected to bring in more competition and innovation to the country’s banking industry.

Contact:

  • William Kasozi
  • Brian Banana Baine