Clients fault Meru bank managers over closure

Arusha. There was more outcry over Thursday’s closure of Meru Community Bank (MeCoB) as it emerged the facility had remained with an outstanding balance of only Sh400 million to meet the central bank requirement of Sh2 billion capital.

Account holders thronged the bank’s headquarters at Usa River from early yesterday pleading they have been taken unaware by the measure contrary to earlier reports MeCoB was about to meet the capital ceiling set by the Bank of Tanzania.

“Only last month we were told the capital had been raised to Sh1.6 billion,” lamented one of the shareholders Felix Nnko, adding that they were requested to raise their shares to 150 from 100 in order to enable it meet the BoT threshold.

Rev Nnko told reporters that the closure of the facility will deal a blow, not only to individual account holders, but also to the Lutheran parishes in the Meru Diocese which had opened accounts with the closed bank.

“This is a school opening season and parents with deposits do not know where to get the money to pay for the fees,” he said as scores of grim-faced clients stood outside the bank’s headquarters at Usa River along the Moshi highway.

Another account holder Elizabeth Munisi said she had deposited ‘millions’ of her savings with the community bank “which was closer to us”, only to be shocked by indefinite closure amid reports that the refund for account holders would not exceed Sh1.5 million. For his part, Mr Emmanuel Nyiti faulted the management of the troubled bank for not informing its clients on the shortfall and that instead it continued to woo the residents of Meru in particular to open accounts and buy shares in MeCoB.

Officials of the closed bank were not ready to speak to journalists. They were reportedly inside checking the accounts with BoT auditors dispatched there for the purpose Bank’s board chairman Elishilia Kaaya, who is the managing director of the Arusha International Conference Centre (AICC) and one of MeCoB founders, regretted the measure but affirmed they would await further directions from BoT.

In December 2016, the financial facility was warned it risked being ineligible to operate under the BoT regulations because it did not have enough capital. A shareholders’ meeting held directed the board and management of the bank to look for a strategic investor who will pump in the required capital.

By then MecoB had a capital of only Sh400 million against Sh2 billion needed by the central bank for licensing of a community bank.

Although the assets of the bank had by November 2016 increased to Sh5.5 billion from Sh2.6 billion in 2014, it has failed to meet the capital requirements of the central bank.

Loans extended to clients had shot up to Sh3.4 billion in 2016 from Sh1.8 billion in 2014.

Most of the loans were issued to income generation groups,including village community banks (Vicobas), boda boda associations,savings and credit cooperative societies (Saccos), farmer groups, traders, employees and individuals.

Other major shareholders include the Meru Diocese of the Evangelical Lutheran Church in Tanzania (ELCT) (10 per cent shares) and AICC - which has seven per cent shares.