Uganda’s Deposit Protection Fund (DPF) has agreed on rules to stem systemic risks and maximise asset recovery in the event of bank failures as part of a five-year crisis management plan seeking to bolster depositor confidence and open up the banking sector to more investments.The rules contained in the liquidation policy and procedures manual provide guidance on orderly and efficient closure of failed banks, minimise systemic risks and maximise asset recovery.Systemic risk is the risk of an entire financial sector collapsing as a result of the failure of an individual bank, leading to a severe economic downturn.DPF’s crisis management plan (2022-2027) aims to ensure fast and decisive actions in case of bank closure through coordinated approach bringing together key stakeholders, including the DPF, the Bank of Uganda and Ministry of Finance.

During 2022-2027, the fund also aims to attain a payout readiness of between seven and 30 days after the bank failure, expand its mandate to include risk minimisation and resolution of problem banks, grow its size to at least Ush2 trillion ($522.9 million) from Ush1.36 trillion ($355.57 million) as at end of June 2023 to protect at least 3.5 percent of total deposits in the sector and ensure its board members and staff acquire the requisite skills and competencies, and knowledge in deposit insurance.