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Regulations limit new bank accounts-TBA

20th December 2012
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Lawrence Mafuru

Banks are pointing an accusing finger at the country’s laws that govern and regulate their operations blaming their limited service reach, despite high demand, to stipulations of the laws.

Speaking to The Guardian in an interview held yesterday with the Tanzania Bankers Association (TBA) Chairman Lawrence Mafuru, said that banks are obliged to comply with these regulations and he gave examples.

“As bankers, we need more customers but we cannot provide bank accounts without proof of residential addresses for personal accounts…” and according to him, even worse is the case for organisations and SMEs who are to provide Certificate of formation/Incorporation, statement of shareholders or organisers, status of company and a board resolution for opening bank account for corporate account.

To ensure the quickest possible process, customers are advised to prepare all documents aforehand. Conversely, he requested the government to improve the banking environment by hastening the process of creation and dispensing the National identification cards and formalisation of business activities for banks to acquire accurate information timely.

Despite the limited scope in terms of new customers and retention, last month Mafuru denied allegations that banks are losing business to mobile financing systems and actually commended their efforts saying they compliment or rather supplement each other.

“…as bankers we compliment the telecommunication companies…they have made the transfer of money much easiest….” he conceded.

The issue of regulations has previously been addressed by President Kikwete who called on the financial institutions to do away with cumbersome banking procedures that are barring ordinary people from joining them and enjoying the financial services that they offer.

Kikwete said the number of people who own bank accounts in Tanzania is unacceptably small because of the long and unnecessary bureaucratic procedures ahead of opening bank accounts. As such the President asked banks to come up with better strategies to ease the procedure.

“It is not enough to continue complaining that the number of people opening accounts is very low…we should think of simplifying the procedures for people to join the financial institutions…” he asserted and warned that should banks continue with the prevailing prohibitive procedures, then people will also go on using other means to save their money.

Amongst these is the new trend, mobile financial service via hand-phones that are now commanding the largest transactions of money transfer from sending money to family to commercial transactions like the purchase of goods and services such as utitilities.

“We are in a very different era whereby competition requires you as banks to be innovative and come up with simpler means to attract customers…” the president advised them.

Banks however argue that mobile services are not robbing them of clients on the contrary they boast of growth and expansion and they are backed up by reports such as the FinScope 2009 survey on the demand for financial services in Tanzania, that showed healthy growth in the number of people using banks in the country.

The report showed that the population has grown by 10% over the past three years, at which the number of people holding a bank account has risen by 33%. Also, 26% of the population have no money to save or felt they lacked a ‘lump sum’ that was sufficiently large to start saving.

Yet the question of regulations was also raised in the survey where it was recorded that most people besides complaining of having too little money to save, they also felt that banks have ‘’too many conditions’ they are physically not very accessible and costs of operating a bank account are also too high.

SOURCE: THE GUARDIAN