The Ugandan government has announced a significant increase in the Deposit Protection Fund (DPF) from Shs400 billion to Shs1.3 trillion, aiming to provide enhanced protection for depositors in licensed financial institutions.
The DPF, established as a separate legal entity under the Financial Institutions (Amended) Act, 2016, ensures deposit insurance for customers of deposit-taking institutions licensed by the Bank of Uganda. This move is a response to the growing number of individuals opening bank accounts and the necessity to safeguard their deposits.
At a public awareness meeting in Jinja City, DPF board chairperson Ben Patrick Kagoro revealed that the initiative, which began with Shs400 billion in 2017, has expanded to Shs1.3 trillion. Currently, the DPF protects 24 million accounts, a significant increase from the initial 7 million account holders in 2017.
Each bank account holder is now insured up to UGX 10 million by the DPF, regardless of the deposited amount. Kagoro hinted at future plans to raise this coverage, emphasizing the government’s commitment to financial stability.
The deposit insurance limit currently covers 98% of customers’ deposits, with parameters in place for revising the coverage. This process involves collaboration with the Ministry of Finance and requires parliamentary approval to maintain transparency and regulatory compliance.
DPF CEO Julia Clare Olima Oyet assured that any review of the fund’s operations would be conducted cautiously to avoid impacting the East African Community (EAC). Oyet stressed the importance of maintaining financial stability without disrupting the regional balance within the EAC.
Teddy Namugga, the administrator of the Bank of Uganda Jinja branch, urged customers not to despair in case of financial mishaps. In instances where banks fail to provide satisfactory solutions, customers are advised to escalate the matter to the Central Bank for further investigation.
This announcement follows recent social media reports of customers allegedly losing money from their bank accounts under mysterious circumstances, highlighting the importance of a robust deposit protection system for the public’s confidence in the banking sector.
