MDI licence Uganda: How to Apply and Get Approved

What is an MDI?

Microfinance Deposit-taking Institutions (MDIs) are regulated entities authorized by the Central Bank to take deposits and offer selected banking services with lower capital thresholds than commercial banks. Operating as an MDI requires a licence from the Bank of Uganda (BoU).

Step-by-Step Procedure

Incorporate & Choose Legal Form
Register as a legal entity (company limited by shares/guarantee or NGO as applicable). Secure name pre-approval with BoU.
Prepare the Application (in duplicate)
Use the prescribed BoU form, specify the class/activity applied for under the MDI framework, and compile all supporting documents.
Pay Application Fees
Pay the UGX 500,000 application fee (non-refundable) and attach proof of payment.
Capital & Time Deposit
Demonstrate ability to meet minimum paid-up capital of UGX 4 billion and place a time deposit equal to 75% (UGX 3 billion) with BoU or a licensed bank. Provide the certificate of time deposit.
Submit to Executive Director, Supervision (BoU)
File the full pack: forms, proof of fees, capital, manuals, and policies (details below).
Acknowledgment / Deficiency Letter
Within ~10 days, BoU issues an acknowledgment (processing begins) or a deficiency letter with a rectification deadline.
Evaluation & Interviews (up to 6 months)
BoU investigates, conducts an appraisal interview, and may instruct you to publish public notices for 3 consecutive days in national newspapers.
Pre-Licensing Inspection
BoU inspects premises for security, vault/safe, ICT systems, cash reserves, internal controls, and separation of public banking hall/back office.
Decision & Conditions
BoU may grant, grant with conditions/limited scope, or refuse the licence. If approved, you must pay the licence fee (UGX 1,000,000) within 14 days and meet any conditions.
Pre-Opening Clearance
No institution may open for business without BoU’s pre-opening clearance confirming premises, strong room, systems, and security are adequate.

What BoU Assesses

Fit-and-proper status of founders, directors, and senior officers (no financial impropriety or non-performing loan history).
Financial resources & capital adequacy, sustainable funding, and ability to inject core capital when required.
Business record & experience in microfinance.
Soundness & feasibility of the strategic plan and projections.
Public interest and consumer protection considerations.

Required Documents (Core Pack)

Incorporation documents: Certificate of Incorporation, Memorandum & Articles (or NGO registration where applicable).
Board resolution authorizing the application.
Biographical data & CVs of founders, proposed directors, and senior officers; sworn declarations of assets & liabilities; ownership structure.
Personal declarations (BoU forms) and individual bank credit references for substantial shareholders, directors, and officers.
Information sheets for the applicant, substantial shareholders (including corporate), subsidiaries, and affiliates.
Audited financial statements (last 3 years) and management accounts if audits are >6 months old.
Business plan & 3-year projections with assumptions and sensitivity analysis.
Feasibility study (2 copies) covering mission, market research, governance, organization, internal monitoring, strategy, and projected financials.
Capital evidence: proposed structure, time-deposit certificate for 75% of minimum capital (UGX 3bn), source and uses of funds.
Risk-management framework (credit, liquidity, interest-rate, FX, operational, strategic risks).
Credit Manual (lending criteria, provisioning, collateral, lifecycle: analysis → approval → disbursement → monitoring → collections/foreclosure).
Human Resource, Operational, Accounting, Liquidity & Funds Management manuals.
Premises questionnaire and verified notice of registered place of business; head office and prospective branches.
For subsidiaries/foreign applicants: parent board resolution approving investment; home supervisor’s prior approval/No-Objection attesting to fitness & propriety.
Latest balance sheet (or equivalent proof of resources) for operating companies.
Any other information BoU requests.

Systems You Must Have in Place

Implement a banking information management system with: accounting, portfolio tracking, deposit monitoring, customer information, loan lifecycle tools, savings, multi-branching, reporting, backups/recovery, admin support, and a version/upgrade strategy.

Fees & Timelines

Application fee: UGX 500,000
Licence fee (upon approval): UGX 1,000,000 (pay within 14 days of notice)
Annual licence fee: Prescribed by BoU from time to time
Processing time: Typically 6–12 months from complete application
Licence validity: 1 year, expiring 31 December each year

Eligibility

Any company/firm/person may apply to run a deposit-taking microfinance institution, subject to BoU authorization.
Only licensed entities may transact microfinance deposit-taking in Uganda.
Licensed MDIs must append “MDI” to their legal name.

Mandatory Public Notices

After appraisal, BoU instructs the applicant to publish public notices for 3 consecutive days in national dailies and to provide copies to BoU.

Grounds for Rejection/Revocation

Untrue or misleading information in the application.
Failure to meet fit-and-proper criteria or capital/systems standards.
Inadequate risk controls, governance, or public interest concerns.

Operating Obligations (Post-Licence)

Display the licence conspicuously at head office and each branch.
Conduct only the business specified in the licence.
Notify BoU promptly of material changes (directors, officers, shareholders, capital, new/relocated branches, or hours).
No opening of new locations or changes in location/hours without BoU’s written approval.

Processing Flow (At a Glance)

Application → BoU Acknowledgment/Deficiency → Appraisal Interview → Public Notice → Pre-licensing Inspection → Decision (Grant/Conditional/Limited/Refuse) → Capital confirmation & Licence Fee → Pre-Opening Clearance → Open for Business