Clients of closed banks yet to claim Sh3.7bn

Arusha. A total of Sh3.7 billion is yet to be reimbursed to depositors of funds in the recently closed banks, it has been revealed.

The amount paid out so far by the central Bank of Tanzania (BoT) is Sh7.3 billion which accounts for 66 percent of the total Sh11 billion that has to be reimbursed.

The financial institutions - six of them community banks, and one full-fledged commercial bank - were closed by BoT between May 2017 and January 2018.

They are FBME - which was closed on May 8, 2017 - and the Mbinga Community Bank whose doors were shut four days later.

Five others - namely the Convenant Bank for Women, Efatha Bank, Meru Community Bank, Njombe Community Bank and Kagera Farmers Cooperative Bank - were closed on January 4, 2018.

Speaking here early this week, the acting director of the Debt Insurance Board (DIB), Richard Malisa, said Sh2.4 billion was paid out to FBME Bank depositors.

Meru Community Bank, whose closure caused much uproar in and around Arusha, was second in the amount settled – Sh1.4 billion.

The seven banks had a total of 25,050 depositors and the maximum coverage per depositor is Sh1.5 million.

Depositors for Njombe Community Bank received a total of Sh963 million, Kagera Farmers Cooperative Bank (Sh737 million), Mbinga Community Bank (Sh722 million), Covenant Bank for Women (Sh570 million) and Efatha Bank (Sh472 million).

Mr Malisa, who is the Finance and Administration manager with DIB, attributed delay to pay all the depositors’ lack of information especially for the rural dwellers.

“Others simply had small balances and they felt they don’t have money to pay for the transport costs,” he told journalists during a BoT-organised economic and financial reporting training.

He added that the cost of following up the deposits was much higher for depositors of FBME Bank which had shares outside the country.

He said the facility (DIB) was keen to ensure all the depositors were paid there mandatory maximum pay of Sh1.5 million per each of them as per law upon closure of a bank.

However, he stressed that that would depend on the Board getting the necessary details of each account holder and other necessary information.

Out of the closed financial institutions, Njombe Community Bank had the highest number of depositors (8,815), followed by Meru Community Bank (4,667) and Mbinga Community Bank 3,751).

FBME Bank had 3,426, Covenant Bank (2,064), Kagera Farmers Cooperative Bank (1,386) and Efatha, a church-based financial facility, 941 depositors.

Mr Malisa, in his media brief on the operations of DIB, said the account holders should expect additional pay as compensation for the collapsed financial institutions.

However, he was categorical that the final payment would be a tall order as it would have to await the entire liquidation process.

These have to include sale of assets of the liquidated financial institutions, collection of debts, loan recovery and dividend distribution among the shareholders.

DIB was established in 1991 and started operations in 1994, to provide insurance against loss or part of all the deposits in member institutions (banks).

As of June 30, last year, its fund size was Sh520 billion. The initial contribution of Sh1.5 billion was made by the government in 1994.

Other sources of finance include premium from member institutions, interest income from DIB investments and subvention from BoT.