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The
Bank of Tanzania has been taking measures to stabilise the
banking industry, including merging small banks with inadequate
capital.
Non-performing loans in Tanzania stood at 9.36% of total loans
in March, nearly twice the recommended threshold of 5%. The
proportion of bad loans stood at 10.50% in March 2020, according
to the ministry of finance.
The bank said in a statement late on Sunday its investigations
had found employees of some banks and financial institutions
were directly responsible for “issuing loans without following
procedures, fraud/corruption or other practices that are
tantamount to lack of integrity”.
It said, among other measures, commercial banks would be
required to take legal action against such employees, and the
regulator would blacklist and prevent them from working in the
financial sector in Tanzania.
The central bank said it had ordered financial institutions to
provide details of government officials who have non-performing
loans to their employers for appropriate action.
“High rate of non-performing loans is among major causes of high
lending rates and may lead to instability of the banking
sector,” the statement issued by Governor Florens Luoga said.
The International Monetary Fund said in December 2018 that at
the time nearly half of Tanzania's 45 banks were vulnerable to
adverse shocks and risk insolvency in the event of a global
financial crisis.
(Reporting by Nuzulack Dausen; Editing by George Obulutsa and
Giles Elgood)
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