THE BANKING AND FINANCIAL INSTITUTIONS ACT
ARRANGEMENT OF SECTIONS
1. Short title.
LICENSING OF BANKS AND FINANCIAL INSTITUTIONS
4. Prohibition on doing banking business, etc.
5. Power of the Bank to grant licences.
6. Licensed banks and financial institutions authorised to carry on banking business.
7. Application for a licence.
8. Duration of licence.
9. Revocation of licence.
11. Transitional provisions.
CAPITAL, RESERVES AND ACCOUNTS
12. Minimum capital requirements.
13. Minimum capital.
14. Impairment of capital prohibited.
15. Computation of capital and financial ratios.
16. Accounts and audit.
SUPERVISION, REGULATION, CO-ORDINATION AND CONTROL
17. Supervision to vest in the Bank.
18. Power of Bank over banks and financial institutions.
19. Establishment of branches.
20. Transfer of ownership.
21. Power of Bank to give general directives.
22. Bank to authorise voluntary merger, etc.
ESTABLISHMENT OF THE DEPOSIT INSURANCE FUND
23. Establishment of the Fund.
24. Deposit Insurance Board.
25. Contributors and contributions to the Fund.
26. Protection of deposits and payments out of the Fund.
27. Role of Board where bank or financial institution is insolvent.
28. Power of Board to lend.
29. Annual report of the Board's activities.
SPECIAL DUTIES OF BANKS AND FINANCIAL INSTITUTIONS
30. Exhibition of licences.
31. Exhibition of balance sheet.
32. Publication of balance sheet.
33. Statements to be furnished by banks.
34. Bank to deal with abandoned property.
35. Abandoned property.
36. Fidelity and secrecy.
RESTRICTIONS ON BANKS AND FINANCIAL INSTITUTIONS
37. Prohibited operations.
38. Persons not eligible to take part in management of banks or financial institutions.
39. Restriction on use of the word "bank", etc.
SEIZURE, RE-ORGANIZATION AND LIQUIDATION OF OPERATIONS
40. Voluntary liquidation.
41. Seizure pending compulsory liquidation.
42. Seizure in other circumstances.
43. Consequences of seizure.
44. Management by Bank upon seizure.
45. Compulsory liquidation.
46. Reorganisation by order of Court.
REPRESENTATIVE OFFICES OF FOREIGN BANKS AND FINANCIAL INSTITUTIONS
47. Representative offices of foreign banks and financial institutions.
48. Declaration of bank holidays.
49. Penalty for doing unauthorised business.
50. Default fines.
51. Regulations and rules of court.
53. [Repeal of R.L. Cap. 430.]
THE BANKING AND FINANCIAL INSTITUTIONS ACT
An Act to consolidate the law relating to business of banking, to harmonise the operations of all financial institutions in Tanzania, to foster sound banking activities, to regulate credit operations and to provide for related matters.
[18th October, 1991]
[G.N. No. 4 of 1992]
12 of 1991
10 of 1993
10 of 1994
18 of 1995
G.N. No. 591 of 1998
PRELIMINARY PROVISIONS (ss 1-3)
This Act may be cited as the Banking and Financial Institutions Act.
(1) This Act shall extend to Tanzania Zanzibar as well as to Mainland Tanzania and shall bind the United Republic.
(2) The provisions of this Act shall apply to all banks and financial institutions, and where there is a conflict between this Act and any provision of any law establishing a bank or financial institution the provisions of this Act shall prevail over those of that law.
(3) The Bank may, with the approval of the Minister and by notice published in the Gazette, order that the provisions of this Act or any part thereof shall, subject to such terms and conditions as it may impose, apply to institutions involved in the business of financial intermediation.
(4) For the avoidance of doubt, it is hereby declared that no duty to which an auditor or former auditor of a bank or financial institution may be subject, shall be deemed to be breached by reason only of his communication in good faith to the Bank or any officer of the Bank whether or not in response to a request made by either of them, of any information or opinion on a matter to which this section applies and which is relevant to any function of the Bank under this Act or the Bank of Tanzania Act *.
(5) In relation to an auditor of a bank or financial institution this section shall apply to any matter of which he becomes aware in his capacity as auditor and which relates to the business or affairs of the bank or financial institution or any of its affiliates or any director, controller, manager or relative of such person in relation to which the information is given.
(6) In exercising the power under subsection (3), the Bank may, if it deems appropriate so to do, order that the provisions of this Act or any part thereof, shall apply either to all or to any class of savings or credit societies or schemes.
(7) In this section, "savings or credit society" or "scheme" means a society or, as the case may be, a scheme whose principal objects are to encourage thrift among its members and to create a source of credit for its members at a fair and reasonable rate of interest.
In this Act unless the context requires otherwise–
"the Bank" means the Bank of Tanzania established under the Bank of Tanzania Act *;
"bank" means a financial institution authorised to receive money on current account subject to withdrawal by cheque;
"banking business" means–
(i) the business of receiving funds from the general public through the acceptance of money deposits payable upon demand or after a fixed period or after notice, or any similar operation through the frequent sale or placement of bonds, certificates, or other securities, and the use of those funds either in whole or in part for loans or investments for the account and at the risk of the person doing that business; and
(ii) any other activity recognised as customary banking practice which a financial institution engaging in the activities described in paragraph (i) may be additionally authorised to do by the Bank;
"director" means any person by whatever title or designation known carrying out or empowered to carry out functions in relation to the direction of a bank or financial institution which are substantially the same as those carried out by a member of board of directors of a company incorporated under the Companies Act *;
"effective date" means the date on which this Act comes into operation;
"financial institution" means any person authorised by or under this Act to engage in banking business not involving the receipt of money on current account subject to withdrawal by cheque;
"financial intermediation" means the lending, investing or placement of funds or securities or both, received, acquired or obtained from the general public or from a well defined group of persons by way of deposit, borrowing, contribution, premium or in a fiduciary capacity, either for the account or the person receiving such funds or securities or for the account of others;
"Governor" means the Governor of the Bank of Tanzania, appointed in accordance with the provision of section 7(2) of the Bank of Tanzania Act *;
"Minister" means the Minister responsible for finance;
"place of business" means a branch or office of a bank or a financial institution including a mobile office open to the public;
"prescribed" means prescribed by regulations made in accordance with the provisions of this Act;
"unsecured" in relation to advances or credit facilities means advances or credit facilities granted without security, or in the case of any advance or credit facility granted against security, any part of such advance or credit facility which at any given time exceeds the market value of the assets comprising the security given or which exceeds the valuation approved by the Bank whenever the Bank deems that no ascertainable market value exists for the said assets; and for the purposes of this definition, the Bank may prescribe the terms and conditions under which a third party guarantee may be considered as security.
LICENSING OF BANKS AND FINANCIAL INSTITUTIONS (ss 4-11)
(1) No person other than a bank shall receive money on current account subject to withdrawal by cheque.
(2) With effect from the effective date, no institution may carry on banking business unless it has a licence issued in that behalf by the Bank.
(3) Any person who contravenes the provisions of this section commits an offence and on conviction is liable to a fine of not less than one million shillings or to imprisonment for a term of not less than five years or to both such fine and imprisonment.
(4) Any body corporate which contravenes the provisions of this section and every director and every officer who is in default commits an offence and on conviction is liable to a fine of not less than one million shillings and in addition every director and every officer who is in default shall be liable to imprisonment for a term of not less than five years unless such director or officer proves that the contravention occurred without his knowledge or consent; save that it shall be no defence for a director or officer to prove that the contravention occurred without his knowledge if, having regard to the duties of his office, he ought to have known of the contravention.
(1) Subject to subsection (2) and to section 12, the Bank may, upon application being made by any person intending to undertake banking business, grant the said person a licence to carry on banking business in the United Republic.
(2) In exercising its licensing powers under subsection (1) in relation to any applicant intending to carry on banking business in Tanzania Zanzibar, the Bank shall, through the Minister, consult with the Minister responsible for finance in the Revolutionary Government of Zanzibar.
(3) The Bank shall, in considering any application for a licence take into account, in addition to any other things, the factors specified in section 7 and other provisions of this Act.
Upon the grant of a licence by the Bank in accordance with the provisions of section 4, the relevant bank or financial institution shall be authorised to carry on banking business.
(1) Every application for a licence under this Act shall be in writing and shall include–
(a) five authenticated copies of the law or other statutory instrument by or under which the applicant is established;
(b) a statement of the address of its head office, and the name and address of every director and of its principal officer;
(c) any financial data which the Bank may require;
(d) full particulars of the business it proposes to do;
(e) the location of the principal and other places of business in Tanzania where it proposes to do business, and in the case of a mobile agency, the area to be served; and
(f) any other information as the Bank may from time to time prescribe.
(2) The application and every document submitted in accordance with subsection (1) of this section shall be signed by the directors of the applicant, or by any principal officer legally authorised to do so.
(3) In considering an application for a licence under subsection (1), the Bank shall–
(a) conduct such investigation as it may deem necessary to ascertain the validity of the documents submitted, the financial status and history of the applicant, the character and experience of its management, the adequacy of its capital structure, the convenience and needs of the community it intends to serve, the operations it intends to carry on and the earning prospects afforded by the area to be served;
(b) take into account the extent to which the intended lending policies of the applicant are designed to promote the financing of economic activities in the rural sector, and the extent to which the intended training and employment programs of the applicant are aimed at promoting professionalism in the financial sector;
(c) take into account any other considerations which the Bank may deem appropriate.
(4) Within ninety days after the receipt of an application under subsection (1) of this section, or where further information has been required, after the receipt of the information, the Bank may grant a licence to the applicant or, where the application has been rejected, furnish the applicant with the grounds upon which the rejection is based.
(5) The Bank may, in any case where it grants a licence impose any terms and conditions which it may deem appropriate.
The licence issued under section 7 shall remain in force until revoked; but the Bank may suspend a licence granted under section 7 where a licensed bank or financial institution fails to fulfil any of the minimum requirements set forth in section 13 or where the Bank is of the opinion that the affairs of that institution are being conducted in a manner detrimental to the interests of the depositors or the national interest.
(1) The Bank may revoke the licence granted to any person if that person–
(a) fails to commence operations within a period of twelve months from the date on which the licence was granted unless that period is extended in writing by the Bank;
(b) fails to comply with the terms and conditions of the licence or any remedial measures relating to an inspection of the affairs required by the Bank in accordance with section 59 of the Bank of Tanzania Act *;
(c) is carrying on its business in a manner detrimental to the interests of the depositors or has insufficient assets to cover its total liabilities or is in breach of any of the provisions of this Act; or
(d) ceases to do business in Tanzania.
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