Central bank closes five banks

What you need to know:

A statement released by BoT today, January 4, named the banks as Covenant Bank For Women Limited, Efatha Bank Limited, Njombe Community Bank Limited, Kagera Farmers' Cooperative Bank Limited and Meru Community Bank Limited.

Dar es Salaam. The Bank of Tanzania (BoT) has closed five non-performing banks to protect the stability of the banking system.
A statement released by BoT today, January 4, named the banks as Covenant Bank For Women Limited, Efatha Bank Limited, Njombe Community Bank Limited, Kagera Farmers' Cooperative Bank Limited and Meru Community Bank Limited.
According to the statement BoT has exercised its manadate provided by section 56(1)(g), 56(2) (a), of banks and financial institutions Act of 2006.
“Through powers given by Banks and Financial institutions Act BoT place the banks under the deposit insurance board, as a liquidator, from January 4, 2018,” reads part of the statement.
“The decision has been made after BoT learnt that the banks have inadequate capital, which is contrary to the Banks and Financial institutions Act of 2006 and its regulations,” reads the statement in part.

According to the statement the banks’ capital inadequacy threatens stability of the banking system.
The closure of the banks follows the directives of President John Magufuli last month to the BoT that all non-performing banks should be closed. The IMF in its latest staff report also supported the government’s move to close down the non-performing banks.