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Tanzania Central Bank takes over 'Bank M' over liquidity

What you need to know:

In January this year (2018), the BoT revoked the banking license of Covenant Bank, Efatha Bank, Njombe Community Bank, Kagera Farmers’ Cooperative Bank, and Meru Community Bank, on the basis of their undercapitalization. 


Dar es Salaam. Bank of Tanzania (BoT) has taken over the administration of Bank M Tanzania Limited after the regulator realised that the commercial bank was facing serious liquidity problems.

The takeover became effective on Thursday, August 02, 2018.

“In the exercise of its powers, under Section 56 (1) (g) (iii) of the Banking and Financial Institutions Act, 2006, the Bank of Tanzania has, effective 2nd August 2018, taken over the administration of Bank M Tanzania Plc (Bank M),” the BoT said in a statement.

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It states that the decision follows determination by the BoT that Bank M has critical liquidity problems and is unable to meet its maturing obligations.

“Continuation of the bank’s operations in the current liquidity condition is detrimental to the interests of depositors and poses systematic risk to the stability of the financial system,” the statement reads.

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The BoT has accordingly appointed a Statutory Manager to manage the affairs of Bank M and suspend its Board of Directors and Management.

“Further, Bank M will not open for normal business for up to 90 days during which the BoT will determine on the appropriate resolution option,” the statement reads.

This is the second time within this year that the BoT is making serious decision against banks.

In January this year (2018), the BoT revoked the banking license of Covenant Bank, Efatha Bank, Njombe Community Bank, Kagera Farmers’ Cooperative Bank, and Meru Community Bank, on the basis of their undercapitalization. 
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The BoT said then that the decision came upon determination that the aforesaid banks were critically undercapitalized, hence violating the requirements of the Banking and Financial Institutions Act, 2006 and its regulation.


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