The Bank of Uganda (BoU) will lower the maximum value for interbank cheque payments from Ush10 million ($2,750) to Ush5 million ($1,275) and will also cap the over-the-counter cash withdrawal limits for individual and corporate customers starting on January 1, 2027.

 

This policy change is intended to reduce the amount of physical currency in circulation and encourage the wider adoption of electronic payments within the economy. It will also save the central bank money by reducing the cost of printing currency to replace worn notes.

In a public notice on June 3, the central bank announced that withdrawals from individual accounts would be capped at Ush50 million ($13,197) per day and Ush500 million ($131,970) per week, while withdrawals from corporate or business accounts would be capped at Ush250 million ($65,985) per day and Ush2.5 billion ($659,850) per week.“We are introducing limits on how much cash can be withdrawn over the counter from financial institutions that we supervise, starting on January 1, 2027,” the bank says.“This is in line with the shift towards digital financial services that the BoU has observed, characterised by consumer preferences for electronic payments.”However, these limits do not apply to digital payment channels, such as the Real Time Gross Settlement System and Electronic Funds Transfers, although the BoU may waive the limits for certain transactions or sectors at its discretion.

The BoU noted that, as some sectors still depend heavily on cash, financial institutions will be able to seek exceptions for certain transactions or sectors.

Regarding interbank cheque limits, the bank stated that cheques exceeding the new thresholds will not be honoured, and encouraged the public to consider alternative payment options, such as the Real Time Gross Settlement System, Electronic Funds Transfers, and mobile money.

According to the BoU, the use of cheques has declined over the past six years, falling from 14 percent to six percent of the transactions the bank clears, reflecting a shift towards digital payment channels.“From January 1, 2027 onwards, interbank cheques whose value exceeds the new thresholds will not be honoured. These limits do not apply to intra-bank cheque payments where both the drawer and the payee have accounts with the same institution,” said the BoU.“The public is urged to embrace alternative payment options, such as the Real Time Gross Settlement System, Electronic Funds Transfer and Mobile Money, among others. The Bank of Uganda will continue to support the development of an innovative, vibrant, inclusive and resilient payments ecosystem that supports social and economic transformation.”This is the second time in four years that the Bank of Uganda has lowered the value limits for interbank cheque transactions, having initially lowered the limit to Ush10 million ($2,750) on January 15, 2022 from the previous Ush20 million ($5,278.8).

In its latest annual report (2025), BoU disclosed that it was considering the possibility of further lowering the cap for interbank cheques, in line with the policy measure of capping interbank cheques, which took effect on January 15, 2022, in support of electronic payments. “The Bank will continue to monitor the trend and will consider the possibility of further lowering the cap for interbank cheques,” the report said.

The value of cheque transactions executed in the Ugandan banking system fell by 3.6 percent to Ush 4.62 trillion ($1.21 billion) in the year to June 2025, down from Ush 4.8 trillion ($1.26 billion) in the year to June 2024. The volume of cheques also declined by 3.9 percent, falling from 1.05 million to 1.01 million in the same period.

Conversely, there was a significant increase of 28.6 percent in the value of electronic money transactions, which rose to Ush 326.3 trillion ($86.12 billion) from Ush 253.7 trillion ($66.96 billion), while the volume of electronic money transactions increased by 20.6 percent to 8.4 billion from seven billion in the same period.

The value of EFT transactions increased by 8.7 percent to Ush 64.6 trillion (US$17.05 billion) from Ush 59.4 trillion ($15.67 billion).

Overall, cheques accounted for just 6.2 percent of transactions by volume and 5.6 percent by value in the period under review, compared to 6.9 percent and 6.75 percent respectively in June 2024.“The decline in cheque usage reflects increased public adoption of digital payment channels,” the report says. Across the region, both Kenya and Tanzania have capped the value of cheque transactions in order to boost cashless economic systems.

Tanzania implemented a cap on cheque payments on March 1, 2009, whereby cheques valued above Tsh10 million ($3,824.26) are not accepted for processing in national clearing houses.

In October 2009, Kenya’s Central Bank, in collaboration with the Kenya Banks Association, introduced a rule capping high-value payment. This required amounts of Ksh1 million (approximately $7,751.93) or more (or the equivalent in foreign currency) to be processed electronically via the Real Time Gross Settlement (RTGS) system instead of paper cheques.

The aim was to enhance efficiency and security by moving large transactions to a faster, safer electronic system and effectively phasing out large cheque payments.

The maximum value limits for cheques are set by the individual central banks in East African countries, rather than a single East African Community-wide limit and payments exceeding these limits are typically processed through the respective Real Time Gross Settlement (RTGS) systems.

Kenya is making steady progress towards becoming a cashless society largely driven by factors such as high mobile phone penetration, the rising banked population, increased financial literacy, and government efforts to promote financial inclusion.

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