The Bank of Tanzania (BoT) has moved to shut five non-performing lenders down in a bid to protect the stability of the neighbouring country's banking system.
A statement released by BoT Thursday revealed the affected banks as Covenant Bank For Women Limited, Efatha Bank Limited, Njombe Community Bank Limited, Kagera Farmers' Cooperative Bank Limited and Meru Community Bank Limited.
“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,” the statement from the country's central bank says.
According to BoT, it made the move as part of its mandate as provided by section 56(1)(g), 56(2) (a) of the 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,” it said today.
The regulator says their capital shortfalls are a risk to the stability of Tanzania's banking system.
The closure of the lenders follows a directive by 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 lenders.