Ugandans and businesses will soon face tighter limits on cheque transactions and over-the-counter cash withdrawals following new measures unveiled by the Bank of Uganda (BoU) to reduce reliance on cash and accelerate the adoption of digital payments.
In a circular issued to commercial banks, credit institutions, and microfinance deposit-taking institutions, the central bank said the changes are part of its e-payments strategy aimed at promoting electronic transactions and supporting Uganda's growing digital economy.
Under the new rules, the maximum value of Uganda shilling-denominated interbank cheques will be reduced by 50 percent, from Shs10 million to Shs5 million.
Cheque limits for foreign currencies have also been cut. The maximum value of US dollar cheques will drop from $2,750 to $1,375, euro cheques from €2,250 to €1,125, pound sterling cheques from £2,200 to £1,100, and Kenyan shilling cheques from KSh300,000 to KSh150,000.
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The central bank has also introduced caps on over-the-counter cash withdrawals. Individual account holders will be allowed to withdraw up to Shs50 million per day and Shs250 million per week. Companies and business account holders will be limited to Shs500 million per day and Shs2.5 billion per week.
BoU said the move is intended to encourage the use of faster and more secure payment options such as mobile banking, internet banking, Real-Time Gross Settlement (RTGS), and other electronic payment channels.
"In line with the Bank of Uganda e-payments strategy, which aims to promote a cash-lite economy as part of the broader national digitisation agenda, the Bank of Uganda has reduced the interbank cheque value limits and introduced over-the-counter cash withdrawal caps," the central bank said.
The measures signal a significant shift in the way money will move through Uganda's banking system as regulators seek to increase the use of digital financial services.
For years, cash and cheques have remained widely used, particularly for large business transactions. However, BoU believes reducing dependence on physical cash will make transactions safer, easier to monitor, and less costly for both financial institutions and customers.
Financial sector experts say the changes could accelerate the adoption of electronic payments across the economy, especially among businesses that continue to rely heavily on cash transactions.
The move comes amid rapid growth in mobile money and digital banking services in Uganda, with millions of people increasingly using mobile phones and online platforms to send, receive, and store money.
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However, the new restrictions may pose challenges for sectors where cash remains the dominant mode of payment.
Recognising this reality, BoU has directed banks to apply a risk-based approach when implementing the withdrawal limits. Financial institutions will be required to understand the nature of their customers' businesses and transaction patterns before enforcing the restrictions.
The central bank specifically noted that sectors such as agriculture, artisanal mining, and other cash-intensive industries may require special consideration because of the nature of their operations.
To accommodate such cases, banks will be allowed to seek approval from BoU for customers who need to withdraw amounts exceeding the prescribed limits. Requests for exemptions will undergo detailed due diligence and risk assessments before approval is granted.
BoU has provided a six-month transition period to allow banks and customers to prepare for the changes. During this period, financial institutions are expected to educate customers on alternative payment methods and support their migration to digital platforms.
The awareness campaign will be coordinated through the Directorate of National Payment Systems.
Despite the anticipated challenges, the central bank believes the new measures will strengthen Uganda's transition towards a more digital economy, lower the costs associated with handling cash, and improve transparency in financial transactions.
BoU added that the limits will be reviewed periodically to ensure they remain aligned with the country's evolving economic and technological environment.
