Tanzania: Central Bank Ups Recovery Deposits

THE Central Bank has raised the maximum reimbursements for depositors of liquidated banks from 1.5m/- to 7.5m/-, effective from February 1, this year following public outcry over the amount previously seen to be too little.

The good news was revealed here in Zanzibar by the director of Deposit Insurance Board (DIB) Mr Isack Khiwili at Bank of Tanzania (BoT) and Zanzibar Editors engagement seminar.

Mr Khiwili explained that the changes were in response to public outcry that the 1.5m/- used for almost a decade was too little and demotivating.

He said that the changes exclude victims of the already liquidated banks, of which most have been paid before the new arrangements.

He said, however, some depositors have not turned-up to collect their money. More than 1.86bn/- has not been collected until December 31st 2022.

Section 41 of the Banking and Financial Institution Act 2006 gives power to the Bank of Tanzania to appoint DIB as liquidator of failed banks and financial institutions. Since its establishment, the DIB has been appointed to liquidate nine banks.

The Liquidated banks include Greenland Bank (T) Ltd, Delphi’s Bank (T) Ltd, FBME Bank Ltd, Mbinga Community Bank PLC, Njombe Community Bank Ltd, Meru Community Bank Ltd, Covenant Bank for Women Ltd, Kagera Farmers’ Cooperative Bank and Efatha Bank Ltd.

“We ask depositors who have not collected their pay-out to come for it, as we continue with further liquidation procedures to pay other depositors and other creditors with bigger deposits,” Mr Khiwili said as he explained the status of the 6,660 FBME depositors claiming more than 341bn/-.

He informed editors that after long legal battle over the closure of the FBME involving its branch in Cyprus, it is almost ending following an agreement for liquidation on April 3, 2023 and they were waiting for Cyprus Court ruling following an objection against the agreed liquidation.

The DIB responsibility is to protect depositors’ funds against loss arising from failure of a bank or deposit taking financial institution to the extent provided by the law so as to maintain depositors’ confidence in the banking system.