Bank of Uganda has announced a series of reforms aimed at reducing the country’s dependence on cash transactions and increasing the use of electronic payment systems across the financial sector.
Among the key changes is a reduction in the maximum value of interbank cheques denominated in Uganda shillings. The limit has been cut from Shs10 million to Shs5 million, effectively halving the amount that can be processed through cheque transactions.
The central bank has also revised cheque thresholds for foreign currencies. The new limits stand at $1,375 for US dollar cheques, €1,125 for euro-denominated cheques, £1,100 for pound sterling cheques and KSh150,000 for Kenyan shilling cheques.
In addition, BoU has introduced controls on over-the-counter cash withdrawals. Individual account holders will be restricted to daily withdrawals of up to Shs50 million and a weekly maximum of Shs250 million. Corporate customers and businesses will be permitted to withdraw up to Shs500 million per day and Shs2.5 billion per week.
The drastic measures was communicated through a circular to commercial banks, credit institutions and microfinance deposit-taking institutions, are part of the central bank’s broader strategy to deepen digital financial services and modernise Uganda’s payment ecosystem.
According to the central bank, the measures are intended to encourage greater use of digital alternatives, including mobile banking platforms, internet banking services, Real-Time Gross Settlement (RTGS) systems and other electronic payment channels.
BoU said the reforms are aligned with its vision of building a cash-lite economy that supports the government’s wider digital transformation agenda.
The latest policy changes mark a significant step in reshaping how large-value transactions are conducted within Uganda’s financial system. Regulators argue that reducing reliance on physical cash can enhance security, improve transaction monitoring and lower the operational costs associated with cash handling.
The move comes as digital financial services continue to register strong growth, driven by increasing uptake of mobile money and online banking solutions among individuals and businesses.
Uganda’s digital financial services (DFS) sector has experienced explosive growth, becoming a primary driver of financial inclusion with over 34.6 million active mobile money accounts processing over UGX 200 trillion in transactions annually. This digital infrastructure has expanded beyond basic transfers into digital savings, micro-lending, and investment products.
Formal financial inclusion has grown significantly, increasing from 28% in 2009 to approximately 81% of the adult population, largely driven by mobile money usage and digital savings groups
Fintech innovations have allowed traditional banks and platforms to offer digital microloans and micro-investments—such as Stanbic Bank’s FlexiPay and Standard Chartered’s Shilingi solutions. The digital lending landscape alone projects massive growth to an estimated UGX 17.7 trillion by 2029
Despite the anticipated benefits, the central bank acknowledged that certain sectors remain heavily dependent on cash. To address this, financial institutions will implement the new withdrawal limits using a risk-based approach that takes into account the nature of customers’ businesses and their transaction patterns.
Industries such as agriculture, artisanal mining and other cash-intensive enterprises may qualify for special consideration where operational needs justify higher cash requirements.
Banks seeking exemptions for customers whose transactions exceed the prescribed limits will be required to submit requests to the central bank for assessment and approval. Such applications will undergo detailed due diligence and risk evaluation before any exemptions are granted.
To facilitate a smooth transition, BoU has provided a six-month implementation period during which financial institutions will be expected to educate customers about available digital payment options and support their migration to electronic channels.
Public awareness activities will be coordinated by the Directorate of National Payment Systems as the country prepares for what could become one of the most significant shifts in payment behaviour within Uganda’s banking sector.
