Tanzania: Banks beat capital rise deadline

Most commercial banks have complied with the central bank directive of increasing their minimum capital requirement by 200 per cent to 15bn/-.

The three years deadline to raise the capital from 5bn/- to 15bn/- ended in this year's first quarter, but by end of March, 30 out of 34 banks complied.

The BoT Director of Banking Supervision, Mr Agapiti Kobelo, told 'Daily News' that the remaining ones are under special arrangement to assist them reach the target.

The Director added: "for the remaining one (a few) we arrange a capital restoration plan to (assist) them meet the requirements."

He said community banks, non-cheque issuing, the deadline is still at 2017. 

In total the country has some 55 banks. Through the letter of intent to IMF, the government said, however, did not mention the names of the banks that failed to meet the deadline.

Mr Kobelo said: "Some information is restricted to the regulators" and not for public but assured the society the banking sector is healthy.

Nevertheless, the letter said "the banking sector remained vibrant with adequate liquidity and capital above regulatory requirements," in the first half of this year. Asset quality improved, as indicated by the ratio of nonperforming loans (NPLs) to total loans.

The latter declined from 8.5 per cent in September 2014 to 6.5 per cent in March 2015, reflecting write off as well as efforts made by banking institutions to recover NPLs.

To cope with increasing innovations, risks and new developments in the banking sector, BoT carried out a review of the existing prudential regulations that were issued in 2008 and came up with revised as well as new prudential regulations in 2014.

New regulations were issued on consolidated supervision, while revised regulations covered matters such as capital adequacy, credit concentration, external auditors, internal controls and internal audit, liquidity management, disclosures, and prompt corrective action.

In addition, the National Payment System Bill, which will allow for the issuance of regulations on mobile payments, went through first reading in the Parliament in February 2015.
Source: Daily News, reported from Dar es Salaam, Tanzania
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