Bank saving culture in Tanzania still low

Over 90 per cent of bank clients have less than 1.5m/-in their accounts as they the banks to channel their salaries only, according to a Central Bank official.

Mr. Richard Malisa, Finance and Administration Manager of Bank of Tanzania’s Deposit Insurance Board said at a seminar in Dodoma that only eight per cent of bank clients have more than 1.5m/- in their accounts.

Data from BoT’s Monthly Economic Review, showed that savings and time deposits accumulated to 6.2tri/-as per end of last year. He said due to low level of deposits the Board has pegged 1.5m/-as maximum cover in case of bank collapse.

“The law advises to protect at least 90 per cent of total depositors in case of a run on the bank or bank collapse,” Mr Malisa said. The DIB fund has reached 220.5bn/- at the end of last year compared to 1.5bn/- when the fund started.

“We review the fund cover amount time after time…good practice has to be two or three times of the country’s per capita,” Mr Malisa said in his presentation. The country per capita is between 700,000/- and 800,000/-.

“All types of deposits received by bank and financial institutions under their normal course of business are protected,” Mr Malisa said. The maximum protection of 1.5m/- per depositor per bank though look small, is better compared to 500,000/- of 2003 and 250, 000/- of 1994.

The manager said those 8.0 per cent are controlling 90 per cent of total country deposits in the banks.

This means that out of 6.2 tri/- over 5.58tri/- belongs to merely 8.0 per cent, mostly corporate. DIB receives its cover fund from government subsidies, and charge 0.15 per cent of average premium total deposits in 12 calendar months.

CRDB Bank and National Microfinance Bank (NMB), are controlling big chunk of these deposits, almost over 50 per cent, according to industry players. DIB has a total of 57 members as at September, 2015 and started operation in 1994 as an independent board under the auspicious of BoT.

The main objective of the fund is to provide insurance against loss of part or all the deposits in case of a bank failure and also to contribute to the stability of financial system.

Source: Daily News, reported from Dar es Salaam, Tanzania

Share on Google Plus

About Unknown

This is a short description in the author block about the author. You edit it by entering text in the "Biographical Info" field in the user admin panel.