Bank of Uganda Act

Section Interpretation Section In this Act, unless the context otherwise requires— “ Bank ” means the Bank of Uganda established under section 2 ; “ Board ” means the Board of Directors established under section 7 ; “ currency point ” has the value assigned to it in Schedule 1 to this Act; “ executive director ” means a person appointed under section 28 ; “ financial institution ” includes a bank, credit institution, building society and any institution classified as a financial institution by the Bank ; “ Fund ” means the General Reserve Fund of the Bank established under section 15 ; “ Governor ” means the Governor of the Bank appointed under section 27 ; “ Minister ” means the Minister responsible for finance.

Section Authorised capital Section The authorised capital of the Bank shall be thirty billion shillings which shall be subscribed by the Government from time to time. The authorised capital may be increased by a resolution of Parliament to ensure adequacy to the operations of the Bank . The issued and paid-up capital of the Bank shall be a minimum of twenty billion shillings. Where the capital of the Bank is impaired at any particular time the Government will furnish securities to the Bank to make good the impairment.

Section General Reserve Fund Section There shall be a General Reserve Fund of the Bank which shall be determined by the Board from time to time. The Bank may, in consultation with the Minister , transfer funds from the General Reserve Fund to the capital of the Bank .

Section Distribution of profits and losses Section At the end of each financial year of the Bank and after— making good the authorised capital and General Reserve Fund balance; allowing for expenses of operation; making provision for bad and doubtful debts; making provision for depreciation of assets; contributing to any scheme or fund established under this Act; taking into consideration any other contingencies, In determining the profits and loss at the end of each financial year, the accounts shall clearly distinguish profits or losses arising from the normal operations of the Bank and those resulting from profits or losses from exchange fluctuation. The Board may determine that the whole of the net profit of the Bank be paid into the Consolidated Fund if at the end of the financial year the amount of money in the General Reserve Fund is twice or more than the amount of the paid-up capital of the Bank . The Bank may, after consultation with the Minister , retain from money payable into the Consolidated Fund under this section any amount of money as the Board may determine in satisfaction or reduction of any amount of money due to the Bank by the Government.

Section Unit of currency Section The unit of the currency shall be the shilling. All monetary obligations or transactions shall be expressed, recorded and settled in the shilling unless otherwise provided under any enactment or is lawfully agreed to between the parties to an agreement under any lawful obligation.

Section External value of shilling Section The Board shall, in consultation with the Minister , prescribe the framework for determining the external value of the shilling.

Section Auctioning of foreign currency Section The Bank may buy and sell foreign currency— at rates determined by market conditions; and on terms that may be determined by the Board .

Section Right to issue notes and coins Section The Bank shall— The Bank shall have the sole right to issue notes and coins; and the Government or any person shall not issue currency notes, bank notes, coins or any documents or tokens payable to bearer on demand, being documents or tokens likely to be passed as legal tender. arrange for the printing of notes and the minting of coins; determine the denominations to be issued; issue and reissue and exchange notes and coins at the Bank ’s offices and at the Bank ’s agencies established or appointed by the Bank ; arrange for the custody of unissued stocks of currency and for the preparation, safe custody and destruction of plates and paper for the printing of notes and of dyes for the minting of coins.

Section Design of bank notes Section The Bank shall determine the design of the bank notes issued by it, but no bank note shall bear in its design a portrait of a living person or any political symbol or word.

Section Denominations and form of bank notes and coins Section The bank notes and coins issued by the Bank shall be in denominations of the shilling or fraction of the shilling expressed in cents as shall be determined by the Board with the approval of the Minister . Denominations issued by the Bank shall be in forms and designs and bear devices that shall be determined by the Board . The standard weight and composition of coins issued by the Bank and the remedy and variation shall be determined by the Board .

Section Legal tender Section Coins issued by the Bank , if not tampered with, shall be legal tender for payments up to an amount not exceeding— For the purpose of this Act, a coin shall be deemed to have been tampered with if the coin shall have been— Notes issued by the Bank shall be legal tender at their face value. one thousand shillings, in the case of coins of denominations of not less than five shillings; five hundred shillings, in the case of coins of a lower denomination; or as may be prescribed by the Board . On giving not less than fifteen days’ notice in the Gazette , the Bank may call in any of its bank notes and coins on payment of the face value; and any notes or coins with respect to which notice may have been given under this subsection shall, on the expiration of the notice, cease to be legal tender. impaired, diminished or lightened otherwise than by fair wear and tear; or defaced by stamping, engraving or piercing, whether the coin shall or shall not have been diminished or lightened.

Section Refund of lost or imperfect bank notes and coins Section A person shall not be entitled to recover from the Bank the value of any lost, stolen, mutilated or imperfect bank note or any coin which is tampered with. Subject to subsection (1) , the circumstances in which and the conditions and limitations subject to which the value of any lost, stolen, mutilated or imperfect bank notes or coins tampered with may be refunded as of grace shall be within the absolute discretion of the Board .

Section Evidence of imitation of bank notes Section Where in any proceedings in any court of competent jurisdiction it is to be determined whether a document purporting to be a bank note is an imitation of a bank note, a certificate under the hand of the Governor or any officer of the Bank authorised by him or her certifying that he or she has examined the document which purports to be a bank note, stating the denomination and the number of a bank note and that the document is an imitation of a bank note and is not a note issued by the Bank , shall be received in evidence without further proof as conclusive evidence of the fact that that document is an imitation of a bank note.

Section Exemption from stamp duty Section The Bank shall not be liable to the payment of any stamp duty under the Stamp Duty Act in respect of notes issued by it.

Section Governor and Deputy Governor Section Notwithstanding subsection (4) , the Governor or Deputy Governor may— There shall be a Governor who shall be a person of recognised financial or banking experience and shall be appointed by the President on the advice of the Cabinet. There shall be a Deputy Governor who shall be a person of recognised financial or banking experience and shall be appointed by the President acting on the advice of the Cabinet. The Governor and Deputy Governor shall be appointed for a period of five years and shall be eligible for re-appointment. The Governor and Deputy Governor shall not, while holding the office of Governor or Deputy Governor , occupy any other office or employment whether remunerated or not. become a trustee of any staff, pension, provident or superannuation fund or scheme; with the approval of the Minister act as a member of any commission or committee appointed by the Government to inquire into any matter affecting currency or banking or other matters; and with the consent of the Minister and the approval of the Board , become a director, Governor or member of the Board , by whatever name called, of any international bank or an interna...

Section Appointment of employees Section An employee of the Bank shall not be liable— There shall be executive directors who shall be appointed by the Board and carry on supervisory functions over a number of departments as may be determined by the Board . There shall be heads of departments of the Bank who shall be appointed by the Board . The Bank shall have other officers and employees as the Board may determine. Except as may otherwise be provided by byelaws of the Bank , all appointments of employees shall be made by the Board . Employees of the Bank shall be engaged on terms and conditions that shall be laid down by the Board . No salary, fee, wage or other remuneration or allowance paid by the Bank shall be computed by reference to the net or other profits of the Bank . for any loss or damage suffered by the Bank unless that loss or damage was caused by his or her own default or wilful act; to any legal proceedings for anything which is done in good faith under this Act.

Section Declaration of secrecy Section The members of the Board and officers and employees of the Bank shall be bound by a declaration of secrecy and shall not, except as may reasonably be in the performance of their functions, disclose to any person any material information acquired in the performance of their functions unless called upon to give evidence in a court of competent jurisdiction or to fulfil other obligations imposed by law. Every former member of the Board , officer or employee of the Bank shall continue to be bound by the declaration of secrecy after the termination of service and shall not except with the prior written permission of the Bank disclose any material information acquired by him or her in that capacity, unless he or she is called upon to give evidence in a court of competent jurisdiction or to fulfil other obligations imposed by law. Where the Bank unreasonably withholds permission under this section, the aggrieved party may appeal to the High Court whose decision shall be final. Any person who contravenes this section commits an offence and is liable, on conviction, to a fine not exceeding twenty-five currency points or to imprisonment for a term not e...

Section Exemption from tax Section The Bank shall be exempted from the payment of income tax and profits or capital gains tax in respect of its functions under this Act.

Section Prohibited names Section Unless a written consent from the Minister has been obtained, no financial institution shall register or be registered under any law in force by a name which includes the following words— Central; National; Uganda; Ugandan; Reserve; State; or other equivalent word in any language.

Section Minister’s powers of direction Section The Minister may, after consultation with the Governor and subject to this Act, give directions of a general nature in writing, relating to the financial and economic policy of the Bank . If, after consultation with the Governor , the Minister is of the opinion that the policies being pursued by the Bank are not adequate for, or conducive to, the achievement of the functions of the Bank , the Minister may, with the approval of Cabinet, by directive in writing determine the specific policy to be adopted by the Bank ; and the Bank shall give effect to that policy while the directive remains in force. The Minister shall lay before Parliament any directive issued under subsection (2) within fifteen sitting days after issuing that directive to the Bank .

Section Annual report Section The Bank shall, not later than three months after the end of each financial year, present to the Minister a report generally on the activities and operations of the Bank during the preceding financial year and in particular— with regard to the procedures and policy of the Bank as the Bank considers may properly be given without detriment to the interests of the activities of the Bank ; and a copy of the audited accounts. The Minister shall lay before Parliament the report received under subsection (1) within three months after the end of the financial year.

Section Byelaws Section The Board may, with the approval of the Minister , make byelaws not inconsistent with this Act regulating— the terms and conditions of service by Board members; the structural establishment of the Bank ; the terms and conditions of service for officers and employees of the Bank ; retiring and other service benefits of the employees and officers of the Bank ; and any other matter falling within the scope of its functions.

Section Offences and penalties Section Any person who— Where an offence is committed by a body of persons, every person who at the time of its commission was a director, manager or partner of that body shall be deemed to have committed the offence unless he or she proves— contravenes a provision of this Act; knowingly makes an incorrect statement in a document submitted by him or her; or knowingly makes a false reply to a question asked of him or her for the purposes of this Act, that the offence was committed without his or her knowledge; or that he or she took all reasonable steps to ensure compliance with this Act.

Section Regulations Section The Minister may, after consultations with the Board , make regulations generally for better carrying into effect the provisions of this Act.

Section Power to amend Schedule 1 Section The Minister may, by statutory instrument, with the approval of Cabinet, amend Schedule 1 to this Act.

Section Credit and other operations Section The Bank may— open accounts for and accept deposits from— grant to financial institutions advances for fixed periods not exceeding three months, at a rate of interest not being less than one percent above the Bank ’s standard re-discount rate against promissory notes secured by the pledge with the Bank — Subject to this Act, the Bank shall not— At any particular date the total amount of— the Government; local governments; funds, corporations and institutions controlled by the Government; and financial institutions; buy, sell, discount and re-discount inland bills of exchange, promissory notes, treasury bills or other instruments; subject to subsection (4) , purchase and sell securities of the Government which have been publicly offered on issue which is being made to the public at the time of acquisition and such securities are to mature within a period of twenty years; grant advances to its customers specified under paragraph (a) for fixed periods not exceeding three months against publicly issued treasury bills of the Government maturing within ninety-three days; securities of the Government which have been publicly offered for sale and...

Section Publication of re-discount rates Section The Bank shall fix and make public at all times its standard re-discount rate; and the Bank may determine different terms, conditions and rates of interest in respect of particular classes of transactions.

Section External reserve Section The Bank shall maintain a reserve of external assets at least equal to four weeks’ import requirements of the country consisting of any or all of the following— convertible foreign exchange in any of the following forms— gold coin or gold bullion; demand or time deposits, money at call, notes and coins; bills of exchange when they bear at least two signatures of which one is that of a commercial bank and which have a maturity not exceeding ninety days exclusive of days of grace; marketable securities of, or guaranteed by, foreign governments or international financial institutions; any external fund, facility or drawing rights, inclusive of the reserve tranche purchase from the International Monetary Fund , which the Minister , after due consultations with the Bank , considers acceptable for inclusion. The Bank will advise the Minister whenever the target on reserves is likely to be violated for any reason and suggest remedial measures.

Section Relationship with Government Section The Minister may direct the Bank to render advice to the Government on financial or other related matters, and the Bank shall advise and inform the Government through the Minister on any matter which is within its functions and powers under this Act. The Bank shall render services to the Government as may be determined by the Minister . The Government shall seek advice from the Bank on monetary policy, and it shall be the duty of the Bank to formulate such monetary policy and advise the Government accordingly. The Government shall consult with the Bank from time to time on its domestic or foreign credit requirements or any other relevant matter.

Section Temporary advances Section The Bank may make temporary advances to the Government and local governments in respect of temporary deficiencies of recurrent revenue. The Treasury shall, at the beginning of each financial year, identify and submit to the Bank all its requirements for temporary advances for that year; and the Bank shall, subject to subsection (3) , operate within that requirement. The total amount of advances made under subsection (1) shall not at any time exceed eighteen percent of the recurrent revenue of the Government. The Bank shall not guarantee a payment to any person on behalf of Government or make an advance to Government or to any person on behalf of Government, except as required under section 34 of the Public Finance Management Act. The Bank shall charge market rates of interest on any advance to the Government or local government unless the Board determines otherwise.

Section Report on advances Section Where in the opinion of the Bank the limitations on bank credit prescribed under section 33(3) or the holding of securities is exceeded, the Bank shall make a report on the Bank ’s outstanding advances or holding of securities in terms of those sections and the causes that have led to the breach of the limitations, together with any recommendation or remedy; and the Bank shall make further reports and recommendations to the Minister at intervals not exceeding six months until the situation has been rectified. At any time when the limitations on bank credits or the submitted requirement is exceeded, the powers of the Bank to grant additional financing shall cease until the situation has been rectified.

Section Development financing Section The Bank may participate in development financing through— the refinancing facilities to financial institutions; the management of loans and grants for development projects through commercial banks; or closely supervising the outcome of the funds dispersed to commercial banks. For the avoidance of doubt, the Bank shall not directly finance any development project with the exception of development funds established under section 29(6) .

Section Clearing house Section The Bank may provide facilities for clearing financial instruments generally on terms that may be determined by the Bank . The Bank may make regulations prescribing the procedure and other provisions for the participation in the clearing house and for the clearing of cheques and other credit instruments. The Bank may allow a commercial bank to participate in the activities of the clearing house on the recommendation of the Uganda Bankers Association.

Section Cooperation with financial institutions Section The Bank shall in the discharge of its functions under this Act seek the cooperation of and cooperate with financial institutions in order— to promote and maintain adequate and reasonable banking services for the public; to ensure high standards of conduct and management throughout the banking system; to promote such policies not being inconsistent with any provision of this Act; to provide facilities for the clearing of financial instruments for financial institutions generally on terms determined by it; and to vet directors of the financial institutions.

Section Minimum cash reserve balances Section Subject to this section, the Bank may prescribe for each bank or group of financial institutions the minimum cash reserve balances inclusive of vault cash which may be required to be maintained in the form of deposits at the Bank or any other method laid down by the Bank . The Bank may prescribe various ratios for different kinds of liabilities and shall prescribe the methods of computing the amount of cash reserve balances. The total amount of the cash reserve balances referred to in subsection (1) shall not exceed twenty-five percent of the financial institution ’s deposits and other liabilities; but within this overall limit the Bank may impose incremental reserves up to one hundred percent on any increase of any kind of liability from a date prescribed by the Bank . The Bank may impose on a financial institution which fails to maintain the minimum cash reserve balances required under this section a penalty not exceeding one-tenth of one percent per day on the amount of the deficiency for each day during which the deficiency continues, and the amount of any such penalty may be recovered by deduction from any balance of, or money owin...

Section Control of credit and interest rates, etc. Section The Bank may, in consultation with the Minister , by statutory instrument, prescribe— Any prescription made under subsection (1) shall— the maximum amounts of investments, loans, advances and bills and promissory notes discounted, whether applied in total or to any specified class or classes of such investments, loans, advances and bills and promissory notes discounted, which each financial institution may have outstanding during the period that may be specified by the Bank ; the purpose for which loans and advances may be granted and the class of business underlying investments and bills and promissory notes discounted; the maximum period of loans and advances and the type and minimum amount of security which shall be required and the maximum tenor of bills and promissory notes discounted; the maximum or minimum rates of interest and other charges which in the transaction of their business financial institutions may pay on any type of deposit or other liability and impose on credit extended in any form; and the maximum charges which in the transaction of their business financial institutions may impose on any banking trans...

Section Financial institutions to furnish information Section Every financial institution shall furnish to the Bank in a manner prescribed by statutory instrument all information that may be required by the Bank for the proper discharge of its functions. The Bank may publish in whole or in part information furnished to it under subsection (1) as the Board may determine. The Bank shall not publish or disclose any information regarding the affairs of a financial institution or of a customer of a financial institution unless the consent of the institution or the customer has been obtained.

Section Financial institutions as agents of Bank Section The Bank may appoint any financial institution as its agent for the issue, reissue, exchange and withdrawal of notes and coins or for any other purpose on terms and conditions that may be agreed upon by the Bank and the institution appointed agent.

Section Financial year Section The financial year of the Bank shall be the period of twelve months commencing on the 1 st day of July and ending on the 30th day of June of the following year.

Section Audit Section The accounts of the Bank shall be audited, at least once every financial year, by the Auditor General or an auditor appointed by him or her to act on his or her behalf.

Section Returns Section The Bank shall, as soon as may be practicable after the end of each quarter, make a quarterly return of its assets and liabilities, and the return shall be published in the Gazette and a copy submitted to the Minister . The Bank may submit to the Minister , information on the exercise and performance of its duties or on its assets and liabilities in a form that may be determined by the Board .