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KAMPALA, Sept 17 – The Bank of Uganda has raised the cash reserve requirement for commercial banks as the Ugandan shilling continues to weaken, tightening the amount of funds lenders can deploy through the financial system.
Commercial banks will be required to increase their cash reserves to 13.5% from 11%, effective September 24, according to a circular issued by the central bank on September 15.
The increase requires banks to hold a larger proportion of their deposits as reserves with the central bank, reducing the funds immediately available for lending and other uses.
The move comes as Uganda’s currency faces continued downward pressure, placing greater focus on liquidity conditions and monetary management.
