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Move comes three weeks after Magufuli directed regulator to take action

By Lilian Kwamboka | Published Thu, January 4th 2018 at 11:18, Updated January 4th 2018 at 11:28 GMT +3
 Bank of Tanzania headquarters  Photo: Courtesy

The Bank of Tanzania has revoked business licenses for five banks due to the breaching of core capital rules. This move comes three weeks after President John Magufuli directed the country’s regulator to take action on such banks.

It also ordered for a compulsory liquidation and possession of The Covenant Bank for Women (Tanzania) Limited, Efatha Bank Limited, Njombe Community Bank Limited, Kagera Farmers’ Cooperative Bank Limited and Meru Community Bank Limited.

In line with its mandate, under Section 41(a) of the Banking and Financial Institutions Act of Tanzania, the bank appointed the Deposit Insurance Board as the liquidator of the aforesaid banks effective from January 4, 2018.

This measure has been taken upon a determination by the Bank of Tanzania, that the above-mentioned banks are undercapitalized hence violating the requirements and regulations of the Banking and Financial Act.

In a press release dated January 4, the Bank of Tanzania stated that continuation of these banks’ operations in their current capital position would be detrimental to the interests of depositors, and poses a risk to the stability of the financial system.

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