Tier 2 financial institutions are performing satisfactorily - BOU

Even when the two saw their exit out of the banking sector, the central bank says credit institutions under tier two are on a steady performance with a positive outlook.

Bank of Uganda says tier two of the financial institutions are moving steadily strong with business activities despite the continuous revoking of licenses among some credit banks with limited minimum capital.

However senior Economist Julius Mukunda believes that the central bank should support the tier two financial institutions than revoking licenses if credit financial institutions are to thrive amidst competition in the banking sector

This year, so far two financial institutions have seen their exit out of the banking sector, EFC and Mercantile Credit Bank limited.

Even when the two saw their exit out of the banking sector, the central bank says credit institutions under tier two are on a steady performance with a positive outlook.

Bank of Uganda says some of the financial institutions in tier 1 are on the verge of being downgraded to credit institutions.

“There are some commercial banks that are going to downgrade to tier 2 because they lack operating requirements” Egesa said.

Senior Economist Julius Mukunda believes the central Bank has not done more of support to uplift credit institutions arguing that revoking licenses and winding up of activities affects the economy

This is not the first time the central bank is closing a bank in the country over poor governance and undercapitalization. Teefe Trust Bank, International Credit Bank, Cooperative Bank, Greenland Bank, Global Trust Bank Uganda, National Bank of Commerce, EFC and Crane Bank Limited were closed at different intervals for not meeting requirements of the operating licence.