Tanzania’s Financial Sector Gets Tightened Regulations on Compliance

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The Bank of Tanzania (BOT) has recently stepped up its efforts to ensure that banking and financial institutions (BFIs) and microfinance service providers (MSPs) operating in the country adhere to strict compliance requirements.

Background

According to a report, BFIs are governed by the Banking and Financial Institutions Act No. 5 of 2006, while MSPs fall under the Microfinance Act No. 10 of 2018.

Regulations for BFIs and MSPs

The BOT has set specific regulations for both BFIs and MSPs, including:

Minimum capital requirements
Management structures
Deposit insurance fund contributions

Compliance Requirements for BFIs

BFIs are required to:

Commence business within 12 months of receiving their license, failure to which their license can be revoked
Have a board of directors comprising at least five members, with the majority being non-executive

Compliance Requirements for MSPs

MSPs are categorized into four tiers, with Tier 1 institutions required to maintain minimum core capital of TZS 20 million (approximately USD 8,600).

Both BFIs and MSPs must also adhere to regulations regarding:

Liquid assets
Prohibited activities
Financial consumer protection

Consequences of Non-Compliance

Failure to comply with these regulations can result in penalties, fines, or even revocation of licenses.

Industry Expert Opinion

Industry experts say that the tightened regulations are necessary to maintain public trust and confidence in the financial sector.

“The Bot is doing a great job in ensuring that financial institutions operate within the law,” said [expert’s name], a finance expert. “This will help prevent cases of fraud and ensure that depositors’ funds are safe.”

Conclusion

In conclusion, the Bank of Tanzania’s efforts to tighten regulations on compliance are expected to improve the overall stability and reliability of the country’s financial sector.