Nairobi, March 2 -- The stringent guidelines set by Uganda's Finance Ministry for commercial banks in a bid to cushion against shocks in the financial sector have forced some commercial banks to downgrade and become tier-2 financial institutions.

Opportunity Bank and Guaranty Trust Bank, for instance have been struggling to raise the minimum paid-up capital of Ush120 billion ($30.45 million), as set by the Finance ministry, fanning fears that they could lose the trading licence, should they fail to capitalise by June 30.

According to the Bank of Uganda (BoU), the higher capital requirement in the banking sector is intended to enhance the financial system's resilience to shocks, promote financial stability, and advance the capacity of th...