Banks and other financial institutions with a shaky financial base could be out of business soon after the government yesterday announced new regulations - increasing the minimum capital requirement from Shs4 billion to Shs25 billion.
The new regulations titled: The Financial Institutions (Revision of Minimum Capital Requirements) Instrument, 2010, tabled in Parliament by State Minister for Finance Fred Omach, require financial institutions to raise their capital to Shs10 billion by March 2011, and thereafter be obliged to boost it to Shs25 billion by March 2013. However, MPs led by the Public Accounts Committee chairperson, Mr Nandala Mafabi, expressed concerns that the new regulations could put commercial banks and other small financial institutions out of business and scare away potential investors in the financial sector - abating the economy in the process.
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