ASSESSING THE EFFECTIVENESS OF CENTRAL BANK REGULATION IN UGANDA’S COMMERCIAL BANKING INDUSTRY
AUTHOR – TAHINDUKA AARON* & DR. RHAJIV BHALLA**, LL.M (MASTERS OF LAW)* & PROFESSOR**, UNIVERSITY INSTITUTE OF LEGAL STUDIES, CHANDIGARH UNIVERSITY, MOHALI
BEST CITATION – TAHINDUKA AARON & DR. RHAJIV BHALLA, ASSESSING THE EFFECTIVENESS OF CENTRAL BANK REGULATION IN UGANDA’S COMMERCIAL BANKING INDUSTRY, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 4 (4) OF 2024, PG. 423-428, APIS – 3920 – 0001 & ISSN – 2583-2344.
Abstract
The financial stability of a country is deeply intertwined with the performance and regulation of its banking sector. In Uganda, the role of the commercial banking industry is critical to fostering economic growth, enabling efficient allocation of resources, and supporting broader financial inclusion goals. The Bank of Uganda (BoU), as the central bank, plays a pivotal role in maintaining the stability and integrity of the financial system through a comprehensive regulatory framework. However, the effectiveness of these regulations in safeguarding the health of Uganda’s banking industry has been a subject of ongoing debate. This study aims to assess the effectiveness of central bank regulations in Uganda’s commercial banking industry, evaluating both the successes and limitations of these regulatory measures[1]
In the context of a rapidly evolving financial environment, characterized by technological advancements such as mobile money services and digital banking, the regulatory framework must be agile and responsive to emerging risks. Uganda’s banking sector, which has witnessed significant growth over the past few decades, faces unique challenges related to regulatory enforcement, financial inclusion, market competition, and systemic risks. Despite the Bank of Uganda’s efforts to implement prudential regulations, concerns persist about compliance, the risks posed by informal financial institutions, and the ability of regulators to adapt to new financial technologies. This paper seeks to examine how effective the BoU’s regulatory measures have been in mitigating these risks, ensuring the stability of the banking sector, and fostering a more competitive and inclusive financial environment[2]. The financial stability of Uganda’s banking sector is crucial for the country’s economic growth and financial inclusion goals. The Bank of Uganda plays a central role in regulating and overseeing the banking industry, yet challenges persist in ensuring the effectiveness of its regulatory framework. As Uganda’s financial environment evolves with technological advancements, such as mobile money and digital banking, the central bank must continuously adapt its regulatory measures to address emerging risks and maintain the stability of the banking system.
Keywords: Bank of Uganda (BoU), Commercial Banking Sector, Regulatory Measures, Capital Adequacy Requirements, Liquidity Management, Non-Performing Loans (NPLs), Financial Stability, Financial Inclusion, Mobile Money, Fintech Regulation, Enforcement Capacity, Compliance
[1]J. B. Smith, “An Analysis of Financial Regulation in Developing Economies,” International Journal of Banking Studies, 2021, p. 45
[2] Bank of Uganda, “Annual Report 2023,” Bank of Uganda, Kampala, 2023, p. 58