The Bank of Uganda has clarified on its mandate of supervision of financial institutions in and outside Uganda.
This is in response to the recent media debates on issues related to the regulation and supervision of financial institutions and what amounts to conduct of financial institutions in Uganda.
The debate is in relation to a case in which the Commercial Court last week ordered Diamond Trust Bank Uganda and Diamond Trust Bank Kenya to refund Shs34bn and $23.2m (Shs86bn) respectively, which was allegedly deducted Ham Enterprises’ accounts.
In a statement issued this morning, the governor Emmanuel Tumusiime Mutebile says Bank of Uganda’s powers do not extend to activities of foreign banks outside Uganda licensed by foreign regulators.
This mandate derived from the Constitution of the Republic of Uganda, the Bank of Uganda Act, 2000 and the Financial Institutions Act, 2004 as amended (FIA, 2004).
Mutebile also explains that under its territorial jurisdiction, foreign banks lending deposits held in jurisdictions other than Uganda are regulated and supervised by their home authorities.
He adds that Bank of Uganda does not regulate extension of loans/credit or the financing of commercial transactions that are funded using funds obtained from foreign banks that do not take deposits from the public in Uganda.
Another category of commercial transactions that the BOU does not regulate are those funded using funds of International, Regional or Local Development Finance Institutions whether such funds are advanced and administered directly by those institutions or through financial institutions in Uganda.