Tanzania’s banking regulator, the Bank of Tanzania has revoked licenses belonging to five banks and placed them under receivership.
The bank has made this grand move barely weeks after Tanzania’s president John Pombe Magufuli ordered strict action against the poorly performing financial institutions.
Those affected by this include: Covenant Bank for Women (Tanzania) Limited, Efatha Bank Limited, Njombe Community Bank Limited, Kareda Farmers’ Cooperative Bank Limited and Meru Community Bank Limited.
“Further, in line with this Mandate, under section 41 of the banking and Financial institutions Act 2006; the Bank of Tanzania has appointed the Deposit Insurance Board (BID) as the Liquidator of the aforesaid banks effective 4th January 2018.” A statement from Tanzania’s Central bank read in part.
According to the statement, this measure has been taken upon determination by the bank of Tanzania that the aforesaid banks are critically undercapitalizes, hence, violating the requirements of the banking and its financial institutions Act 2006 and its regulations.
It said that continuation of their operations in their current capital position is detrimental to the interest of depositors and poses a risk to the stability of the financial system.
“The bank of Tanzania would like to assure the public that it will continue to protect interests of depositors and maintain the stability of the banking sector.” The statement concluded.