Tanzania’s Central Bank Shuts 5 Banks Over Poor Performance

2 Min Read

The Bank of Tanzania (BoT) today revoked the operating licences of five banks and took them over for being under-capitalized and violating the Banking and Financial institutions Act of 2006 and its regulations.

BoT also appointed the Deposit Insurance Board (DIB) as the liquidator of the banks.

The affected banks are, Covenant Bank for Women Tanzania Limited, Efatha Bank Limited, Kagera Farmers’ Cooperative Bank Limited, Njombe Community Bank Limited and Meru Community Bank Limited.

The Governor of the Bank, Ben Ndulu, said that the regulatory financial institution also suspended the operations of the affected banks and placed them under compulsory liquidation. The decision was taken in furtherance of the BoT’s  mandate under section 41(a) of the Banking and Financial Institutions Act 2006.

Making further clarification on the apex bank’s decision during a news briefing in Dar es Salam, Ndulu said: “These banks are critically under-capitalized. Continuation of their operations in their current capital position is detrimental to the interests of depositors and poses a risk to the stability of the financial system,”

The BoT Governor said BoT would continue to protect the interests of depositors and maintain the stability of the banking sector.

Ndulu, who said the decision to close the affected banks was aimed at ensuring the country’s financial system stability, said the decision was made after BoT learnt that the banks were under-capitalised.

On the issue of paying depositors of the closed banks, he assured that BoT would start issuing compensation to depositors in a month’s time, adding that only those with deposit insurance will be compensated.

According to data provided by the apex bank governor, the five closed banks had only 0.38 percent of all capital in the banking sector.

President John Magufuli had directed last month that all non-performing banks should be closed down.

It would be recalled that in May last year, the BoT revoked the licence of Mbinga Community Bank (MCB) Plc  due to insufficient capital.


Share This Article