CLYDE & CO UPDATER - BANKING IN TANZANIA: POST-LICENSING COMPLIANCE FOR BANKS, FINANCIAL INSTITUTIONS AND MICROFINANCE SERVICE PROVIDERS

In this article, we highlight some of the basic compliance requirements that banks and financial institutions (BFIs) and microfinance service providers (MSPs) in Tanzania must strictly adhere to after receiving their licence to provide banking and financial services.

The Bank of Tanzania (BOT) is the regulatory authority responsible for the licensing of BFIs and MSPs. The BOT’s regulation extends to the conduct of business and operations of BFIs and MSPs.

Governing laws

BFIs are governed by the Banking and Financial Institutions Act No. 5 of 2006 (BAFIA) and subsidiary legislation thereof.

On the other hand, MSPs are governed by the Microfinance Act No. 10 of 2018 (the Microfinance Act) and subsidiary legislation thereof. There are four categories of MSPs:

• tier 1 – deposit taking microfinance service institutions (DTs);
• tier 2 – non-deposit taking microfinance service providers (NDTs);
• tier 3 - savings and credit cooperative societies (SACCOS); and
• tier 4 - community microfinance groups (CMGs).

According to the Microfinance Act, DTs are regulated by the BAFIA even though they are a category of MSP.

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