Mortgage refinancing businesses face sh35b paid-up capital bill
The proposed law also states that the minimum capital fund requirements for mortgage refinance institutions unimpaired by losses shall always, not be less than the minimum paid-up capital (shillings 35 billion).
NPA asked Parliament to insert a sub-clause requiring all players to maintain at least 12% total capital against assets and 14.5% against risk-weighted assets. (File photo)
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Mortgage refinancing businesses will be required to have a minimum paid-up capital of shillings 35 billion if the Bill passed by Parliament is signed into law.
The revelations are contained in the Mortgage Refinancing Institutions Bill, 2025, which was passed during plenary on Thursday, September 4, 2025.
The development comes after the National Planning Authority opposed the passing of the proposed law in late August, describing the figure as prohibitive for new and small market entrants.
NPA senior research manager Rogers Matte presented the Authority’s position on August 12, 2025, during a meeting with Parliament’s Finance Committee to scrutinize the Mortgage Refinance Institutions Bill, 2025.
Despite NPA supporting the minimum capital requirement proposal, it faulted the finance ministry for emphasising high entry thresholds without equally stringent measures on ongoing capital adequacy.
The Authority asked Parliament to insert a sub-clause requiring all players to maintain at least 12% total capital against assets and 14.5% against risk-weighted assets.
NPA also cautioned that the legislation risks falling short of its developmental intent if it does not explicitly prioritise affordable housing.
Presenting the report of the committee on finance, planning and economic development, Amos Kankunda, said that the shillings 35 billion compares well with other countries in the region.
Kankunda Amos Kibwika, Rwampara County Rwampara (NRM).
“About 27.7 billion, 24.9 billion and 41 billion for Kenya, Rwanda and Tanzania, respectively,” Kankunda said during the sitting chaired by Speaker Anita Among.
The proposed law also states that the minimum capital fund requirements for mortgage refinance institutions unimpaired by losses shall always, not be less than the minimum paid-up capital (shillings 35 billion).
“The provision also allows the Central Bank, by statutory instrument, to revise the minimum paid-up capital,” read the committee’s report in part.
The proposed law mandates the Bank of Uganda to regulate mortgage refinancing institutions.
Licence revocation
The law also mandates the Central Bank to revoke the licence of a mortgage refinance business within 12 months from the date of issue of the licence, if satisfied that the licensee obtained the licence fraudulently or through misrepresentation.
“The Mortgage Refinance Institutions Bill, 2025, will help solve the problem of loan mismatch where financial institutions use short-term deposits by customers to lend to mortgagors,” Kankunda said.
Adding,” The Central Bank, in consultation with the Minister, should cap interest rates on mortgages under a mortgage refinancing arrangement.”
The law will require mortgage refinance institutions to provide long-term funding to primary mortgage lenders by re-financing or pre-financing mortgage portfolios for an extended period of at least five years.
Mortgage refinance institutions refinance primary mortgage lenders, and the law prohibits Mortgage Refinance Institutions from offering credit facilities to any other person other than primary mortgage lenders that are in good standing.
General Duties state minister in the finance ministry, Henry Musasizi, said the law will provide stable long-term capital for mortgage lending.
“The key objectives include enabling primary lenders to offer long-term tenures and low interest rates and ultimately making home ownership more accessible, particularly to middle and low-income earners,” Musasizi said.