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Uganda’s Financial Sector Takes a Giant Leap with First Islamic Banking License
Kampala, Uganda - The Bank of Uganda has made a significant step towards promoting financial inclusion and diversity by granting the first Islamic banking license to Salaam Bank Uganda, a subsidiary of a Djibouti-based bank.
What is Islamic Banking?
Islamic banking is a unique and sustainable form of banking that operates on the principles of Shariah law. Unlike conventional banking, it prohibits the collection or payment of interest on loans. Instead, profit-sharing agreements are used to generate returns for investors.
A Significant Milestone
The licensing of Salaam Bank Uganda marks a significant milestone in the country’s financial sector. It is expected to increase access to financial services for underserved communities and promote economic growth.
“We are pleased to announce that we have granted the first Islamic banking license to Salaam Bank Uganda,” said Emmanuel Tumusiime, Governor of the Bank of Uganda. “This move is in line with our strategy to promote financial inclusion and diversity in the country.”
Licensing Process
The licensing process was rigorous, involving a thorough review of the bank’s business plan, governance structure, risk management systems, and compliance with regulatory requirements.
Products and Services
Salaam Bank Uganda plans to offer a range of Islamic banking products and services, including:
- Deposit accounts
- Investment instruments
- Trade finance facilities
The bank will operate under the supervision of the Bank of Uganda and is required to comply with all applicable laws and regulations.
Impact on the Financial Sector
The licensing of Salaam Bank Uganda is expected to boost competition in the financial sector, promote innovation, and increase access to financial services for individuals and businesses.
Other Key Developments in Uganda’s Financial Sector
- The National Payments Act was enacted in 2020 to regulate payment systems and provide for safety and efficiency.
- The Bank of Uganda launched a five-year strategic plan aimed at promoting price stability, financial system soundness, and socio-economic transformation in the country.
- The Uganda Bankers’ Association suspended early loan repayment fees charged on outstanding loans, effective December 1, 2023.
Contact
For more information: William Kasozi Brian Banana Baine