BoT axes TIB CEO, assigns BoT supervisor for banks

15Jul 2019
Henry Mwangonde
Dar es Salaam
The Guardian
BoT axes TIB CEO, assigns BoT supervisor for banks
  • In 2018 BoT revoked business licenses, took possession of, discontinued operations and placed under compulsory liquidation five banks for being undercapitalized and violating the Banking and Financial institutions Act of 2006 and its regulations.

The BANK of Tanzania (BoT) has suspended appointment of TIB Corporate Bank Ltd (TIB- CBL) managing director Frank Nyabundege and replaced him with Frank Luvanda following the bank’s unsatisfactory performance.

Frank Nyabundege

In a statement issued yesterday in Dar es Salaam, BoT said that the actions are taken to make government owned banks do better as well as strengthen the financial sector.

“Accordingly, the Bank of Tanzania as mandated under section 33(2)(b) of the Banking and Financial Institutions Act, 2006 has appointed Fred Luvanda, from the Directorate of Financial Sector Supervision to oversee the affairs and daily business operations of TIB Corporate Bank Limited as Acting Managing Director,” BoT statement reads in part.

The central bank said the measure has been taken to improve the oversight and performance of banks owned by the government, and that the TIB corporate entity will continue to provide all banking services including payment of matured obligations.

The central bank assured the public that it will continue to protect the interest of depositors and maintain the stability of the banking sector.

TIB- CBL is a government-owned development bank, providing strategic commercial banking services to the general public.

The BoT has taken various initiatives in the banking sector to improve efficiency and protecting the stability of the banking system.

In 2018 BoT revoked business licenses, took possession of, discontinued operations and placed under compulsory liquidation five banks for being undercapitalized and violating the Banking and Financial institutions Act of 2006 and its regulations.

In its ‘end of mission’ report released in December 2017, the International Monetary Fund (IMF) cited the decrease in capitalization ratios in some small and mid-sized banks as well as their high non-performing loans among the factors that could lead to a slowdown in the Tanzanian economy.

The IMF report echoed the stated view of President John Magufuli and Prime Minister Kassim Majaliwa, who had directed the central bank to take the necessary measures on banks that do not perform well.

In May, 2017, the central bank revoked the business licence of Mbinga Community Bank (MCB) PLC based in Mbinga District, Ruvuma Region due to insufficient capital.

Regulations issued in 2014 by the BoT indicated minimum capital for fully fledged banks (commercial banks and cooperative banks with countrywide network) at 15bn/-, while microfinance banks and cooperative banks with regional networks have capital requirement of 5bn/-.

Community banks need a 2bn/- capital base, whereas development finance institutions require 50bn/-, merchant banks 25bn/- and Islamic banks 15bn/- capital base to qualify for operating licences.

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