Bank of Uganda Caps Cash Withdrawals in Bold Push Towards a Cashless Economy

By Uganda Today News Desk

KAMPALA — The Bank of Uganda (BoU) has announced sweeping reforms that will significantly change how individuals and businesses access cash from banks, introducing over-the-counter cash withdrawal limits effective January 1, 2027 as part of a broader strategy to promote digital financial transactions and reduce dependence on cash.

The new policy, communicated to commercial banks, credit institutions, and microfinance deposit-taking institutions, is aligned with the central bank’s e-payments strategy and Uganda’s wider digital transformation agenda.

New Withdrawal Limits Announced

Under the new framework, individual account holders will be allowed to withdraw a maximum of UGX 50 million per day and UGX 500 million per week over the counter.

For corporate and business accounts, the daily withdrawal limit has been set at UGX 250 million, while the weekly cap will stand at UGX 2.5 billion. The limits will apply across all supervised financial institutions beginning January 2027.

According to the Bank of Uganda, the restrictions will not affect transactions conducted through digital payment channels such as Real-Time Gross Settlement (RTGS), Electronic Funds Transfers (EFTs), mobile banking, internet banking, and other electronic payment platforms.

BoU’s Drive Towards Digital Payments

The central bank says the move is intended to accelerate Uganda’s transition to a “cash-lite” economy, where electronic payments become the preferred means of conducting large transactions.

BoU argues that digital payments offer greater efficiency, improved transparency, enhanced security, and stronger traceability of financial transactions. The reforms are also expected to reduce the costs associated with handling large volumes of physical cash.

Officials say financial institutions will be required to actively guide customers toward available digital alternatives and help them adopt safer and more efficient payment systems.

Exceptions for Special Cases

Recognizing that certain sectors of the economy still rely heavily on cash transactions, the Bank of Uganda has provided room for exceptions.

Under the guidelines, financial institutions will be expected to undertake risk-based customer profiling to determine appropriate transaction thresholds. Additionally, BoU may grant exceptional approvals for transactions that exceed the prescribed limits where justified.

The central bank says the approach is designed to balance financial innovation with the practical realities of sectors such as agriculture, trade, and other cash-intensive industries.

Cheque Limits Also Reduced

In addition to cash withdrawal caps, BoU has reduced interbank cheque limits by 50 percent across major currencies.

The maximum value of Uganda shilling-denominated interbank cheques will be reduced from UGX 10 million to UGX 5 million. Similar reductions have been applied to US Dollar, Euro, British Pound Sterling, and Kenyan Shilling cheques.

The central bank believes the reductions will further encourage businesses and individuals to migrate to electronic payment systems.

Public Debate Expected

The announcement is likely to trigger debate among business leaders, bankers, and ordinary Ugandans.

Supporters argue that the reforms will strengthen anti-money laundering efforts, improve accountability, and modernize Uganda’s financial sector. Critics, however, may question whether the country has achieved sufficient financial inclusion and digital infrastructure to support such a rapid shift away from cash.

With seven months remaining before implementation, commercial banks are expected to intensify customer sensitization campaigns to prepare account holders for one of the most significant changes in Uganda’s banking landscape in recent years.

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Bank of Uganda has introduced over-the-counter cash withdrawal limits effective January 1, 2027, as part of its strategy to promote digital financial transactions and reduce reliance on cash. 

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