Bank of Tanzania (BoT) said in its June Monetary Policy Statement released over the weekend that, “Most commercial banks have complied with the new capital requirement of 15bn/- well ahead of the February 2015 deadline.”
Mid last year, the central bank issued an ultimatum of three and five years for fully fledged commercial banks and community banks, respectively to conform to the minimum capital requirement.
Under the new requirement, commercial banks have to increase their minimum capital from 5bn/- to 15bn/- while community banks are required to increase theirs to 2bn/- from 250m/-.
The capital enhancement orders for commercial and community banks were published in the Government Gazette on February 23, 2012 and June 22, 2012, respectively.
As of December last year, 23 out of the 33 commercial banks in the country had complied with the requirement. Although community banks have not yet increased their capitals to the required minimum, they still have ample time to do so.
The new capital requirement aims at safeguarding about 50 commercial and community banks’ customers in the country as well as shields the banks against possible financial crises. The requirement came following the global financial crisis that rocked the global economy between 2008 and 2010 and still looms large in the Euro zone.
The Central Bank of Kenya had set December last year as the deadline for all commercial banks to increase their core capitals to Ksh 1bn (about 20bn/- ). Banks in Uganda also were required to increase their capital to Ushs 25bn from the current Ushs 10bn by March this year.
Meanwhile, BoT as it is in the process of reviewing various regulations and enacting new ones following various developments in the financial sector and financial innovations that require best practice.
The central bank has so far approved three banks to operate agent banking following the issuance of guidelines on agent banking in February 2013.
“These guidelines allow banks to extend their outreach through retail outlets, delivering financial services to a wider range of customers at low costs,” the regulator says in its statement.
The report said further that several banks have been partnering with telecommunication companies to offer financial services using mobile phones, facilitating convenient, cost effective and reliable fund transfer and payment system for settling various obligations.
Source: The Daily News, reported from Dar es Salaam, Tanzania
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