More than half of Uganda’s commercial banks would have collapsed if the Central Bank had enforced a three-month customer loans repayments holiday at the onset of the Covid-19 pandemic, the sector regulator has revealed.
Results of the stress test informed the decision to spread customer loan restructuring over a 12-month period instead of offering an outright repayment holiday, Bank of Uganda (BoU) said in a Zoom webinar.
Uganda’s National Social Security Fund (NSSF) says about 100,000 contributors have dropped off its register since the beginning of the lockdown; pointing to rising unemployment levels, reduced payroll tax collections and potential loss of many salary deposit accounts held by commercial banks.
The minimum paid up capital requirement for Ugandan banks currently stands at Ush25 billion ($6.7 million), while the minimum liquid assets to total deposits ratio stands at 20 per cent.
A senior Citibank Uganda executive said the pandemic has created a situation where there is a disproportionately high number of commercial banks chasing after a few, high-value clients.