Government has proposed a slew of changes at Bank of Uganda aimed at strengthening its oversight role of the commercial banking sector.
The changes, which were communicated through a Treasury Memorandum, will see a detachment between the management of the central and its board. Currently, the board chairperson of the central bank is also the head of its management team-the governor.
Other changes, according to the memorandum, seek to define the tenure of directors of the bank. The directors currently serve a term of five years as per the constitution but the BoU Act provides for four years. The amendment therefore seeks to harmonise this position.
Significantly, the reforms will require Bank of Uganda to carry out a valuation of all assets and liabilities of a bank in distress before any action is taken.
Matia Kasaija, the minister of Finance, Planning and Economic Development said the reforms shall form the basis of amendment to the Financial Institutions Act.
The Treasury Memorandum appears to be responding to the crises that have engulfed the central bank in the last couple of years.
The memorandum is also a direct response to some of the recommendations of the report of the Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) into the sale/closure of commercial banks.
In its report, COSASE accused the central bank of highhandedness in some instances when it closed or sold some banks.
Some banks, like Crane Bank, COSASE noted, were sold over the phone without minutes of meetings.
Assets of other banks taken over by the central bank could not be accounted for.
COSASE pinned former Director Commercial Banking, Benedict Sekabira and former Executive Director Justine Bagyenda as people who had conflict of interest in some of the transactions to close the banks.
The committee also recommended that the Inspector General of Police, Martin Okoth Ochola immediately seizes all land titles in possession of city lawyer Kakembo Katende and a loan collection company for the five defunct banks.