Background
The Banking and Financial Institutions Act 2006 (the Act) states that the power related to supervision of all banks and financial institutions is vested in the BoT. Section 4(2) of the Act provides that the BoT is vested with the power to carry out inspections of every banking and financial institution as well as ensuring compliance with any order, directive or determination issued or made by them. We discuss ways in which the BoT has used some of its supervisor powers on Tanzanian commercial banks below:
The Banking and Financial Institutions Act 2006 (the Act) states that the power related to supervision of all banks and financial institutions is vested in the BoT. Section 4(2) of the Act provides that the BoT is vested with the power to carry out inspections of every banking and financial institution as well as ensuring compliance with any order, directive or determination issued or made by them. We discuss ways in which the BoT has used some of its supervisor powers on Tanzanian commercial banks below:
China Commercial Bank
During the inspection of China Commercial Bank in the last quarter of 2020, the BoT had noted that the total capital amount of China Commercial Bank had fallen below the requirement set out in section 17(1) of the Act. Due to the failure to comply with the minimum total capital amount requirement, the BoT was entitled to seize China Commercial Bank and did so in November 2020. The BoT then placed China Commercial Bank under its management in accordance with section 56(1)(g)(i) and section 56(2) of the Act. Upon seizing and placing China Commercial Bank under its management, and undergoing a lengthy process of due diligence, scrutiny and delegation, the BoT appointed the National Microfinance Bank (NMB) as the acquirer of all the assets and liabilities of China Commercial Bank. NMB’s total assets portfolio after acquiring the assets and liabilities of China Commercial Bank increased to over TZS 7.1 trillion.
During the inspection of China Commercial Bank in the last quarter of 2020, the BoT had noted that the total capital amount of China Commercial Bank had fallen below the requirement set out in section 17(1) of the Act. Due to the failure to comply with the minimum total capital amount requirement, the BoT was entitled to seize China Commercial Bank and did so in November 2020. The BoT then placed China Commercial Bank under its management in accordance with section 56(1)(g)(i) and section 56(2) of the Act. Upon seizing and placing China Commercial Bank under its management, and undergoing a lengthy process of due diligence, scrutiny and delegation, the BoT appointed the National Microfinance Bank (NMB) as the acquirer of all the assets and liabilities of China Commercial Bank. NMB’s total assets portfolio after acquiring the assets and liabilities of China Commercial Bank increased to over TZS 7.1 trillion.
Akiba Commercial Bank
Akiba Commercial Bank took a different approach in a similar situation relating to the required total capital amount to be held by a banking institution. Akiba Commercial Bank merged with the National Bank of Malawi in order to meet the total capital amount requirement provided under section 17(1) of the Act. To achieve this, the National Bank of Malawi curated a strategic investment deposit towards Akiba Commercial Bank worth TZS 17 billion. This in turn has kept Akiba Commercial Bank above the minimum core capital of TZS 15 billion as provided by section 17(1) (a) of the Act.
Akiba Commercial Bank took a different approach in a similar situation relating to the required total capital amount to be held by a banking institution. Akiba Commercial Bank merged with the National Bank of Malawi in order to meet the total capital amount requirement provided under section 17(1) of the Act. To achieve this, the National Bank of Malawi curated a strategic investment deposit towards Akiba Commercial Bank worth TZS 17 billion. This in turn has kept Akiba Commercial Bank above the minimum core capital of TZS 15 billion as provided by section 17(1) (a) of the Act.
No comments:
Post a Comment