country experience
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COUNTRY EXPERIENCE. TANZANIA. Tanzania Experience. Outline : An Overview Deposit Insurance Board of Tanzania DIB Experience Lessons and Challenges Way Forward. 1.1 Economic developments. 2005 – 2009 recorded relative economic growth 12.1 % Annual average inflation in 2009 - PowerPoint PPT PresentationTRANSCRIPT
COUNTRY EXPERIENCE
TANZANIA
04/21/23 1
Tanzania ExperienceOutline :
An Overview
Deposit Insurance Board of Tanzania
DIB Experience
Lessons and Challenges
Way Forward
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1.1 Economic developments2005 – 2009 recorded relative economic
growth
12.1 % Annual average inflation in 2009
6.9 percent economic growth in 2009
Per Capita USD. 525.0
Population 40.7 million in 2009
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1.2 Banking Sector
Remained resilient despite global financial turmoil which distressed major international capital and fin. markets
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1.2 Banking Sector (Cont)
Due to low degree of integration of the sector with major international capital and financial markets
No securities of international banks held by local banks and financial institutions'
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1.2 Banking Sector (Cont)As at end of June, 2010
41 banking institutions
448 branches and agencies
33.5 % of branches in commercial city Dar es Salaam
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1.2.Banking Sector (Cont)As at end of June, 2010
Total Assets TZS 11,392.9 billion equivalent to USD. 8.4 billion
Total Deposits TZS 9,172.5 billion equivalent to USD. 6.8 million
90.8% of banking funding structure is composed of deposits
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2. DEPOSIT INSURANCE BOARD OF TANZANIA
2.1 Mandate
Deposit Insurance Fund is established under Section 37(1) of Banking and Financial Institutions Act, 2006.
Establishment of Deposit Insurance Board is provided under section 38(1) of BFIA, 2006.
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2. DEPOSIT INSURANCE BOARD OF TANZANIA
2.2 Mission Statement: Effectively contribute to country’s
financial stability by maintaining public confidence in the financial system through prompt payment of protected deposits to depositors of a failed member bank or financial institution
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2. DEPOSIT INSURANCE BOARD OF TANZANIA
2.3 Objectives :Protect small and unsophisticated depositors
Maintain depositors confidence in the banking system
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2. DEPOSIT INSURANCE BOARD OF TANZANIA
2.4 Governance:Board of Directors
Policy formulation and direction
DirectorDay to day management
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2. DEPOSIT INSURANCE BOARD OF TANZANIA
2.5 MembershipCompulsory to all licensed banking institutions in Tanzania11 members in June, 199641 members in June, 2010
29 Banks12 Non bank financial institutions
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2. DEPOSIT INSURANCE BOARD OF TANZANIA
2.6 Coverage TZS 250,000/= (USD. 250) from 1996
TZS 500,000/=(USD. 500) from 2003
TZS 1,500,000/= (USD.1,000) from May, 2010
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2. DEPOSIT INSURANCE BOARD OF TANZANIA
2.6 Coverage (Cont)All types of deposits received by banks
and financial institutions are insured except:Inter bank deposits
Government Deposits
Deposits of investment company or security firms
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2. DEPOSIT INSURANCE BOARD OF TANZANIA
2.7 FundingMain Source is premiums from members
Size of the Fund by end June, 2010 was TZS 58,922.9 million equivalent to USD. 43.6 million
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3.0 DIB EXPERIENCE OF HANDLING BANK FAILURES
Bank Failures were experiences between 1995 and 2003.
Four bank failures:Meridien Biao Bank (T) Ltd April, 1995
Tanzania Housing Bank August 195
Greenland Bank (T) Ltd April, 1999 and
Delphis Bank (T) Ltd June, 2003
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3.0 DIB EXPERIENCE OF HANDLING BANK FAILURES
3.1 Tanzania Housing BankFailed due to:
Liquidity and Solvency Weak Management Weak internal controls
Voluntarily Liquidate by shareholders
All depositors were fully compensated by the government
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3.0 DIB EXPERIENCE OF HANDLING BANK FAILURES
3.2 Meridien Biao Bank (T) LtdFailed due to:
Poor Mgt Huge placement with parent abroad
Sold to Standard Bank of South Africa limited
Depositors were given choice of fully compensation or continue as customer of the new bank
More than 95 % opted to continue as depositors of the new bank. by the government
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3.0 DIB EXPERIENCE OF HANDLING BANK FAILURES
3.3 Greenland Bank (T) LtdFailed due to:
Weakness on Board oversight Insider dealings Troubled parent company in Uganda
DIB was appointed liquidator By BOT
All depositors were compensated by government
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3.0 DIB EXPERIENCE OF HANDLING BANK FAILURES
3.4 Delphis Bank (T) LtdFailed due to:
Capital impairment Weak Board oversight and management Non performing assets
Part of Assets and Liabilities sold to Federal Bank of the Middle East
DIB was appointed liquidator By BOT
All depositors were assumed by new bank hence no loss to depositors
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4. LESSONS AND CHALLENGES4.1 Increase in Public confidence
Proper handling by safety net players of the failed bank cases as there were no absolute loss
Challenges
Depositors not promptly compensated
Wrong signals to the public that government will always rescue all failures
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4. LESSONS AND CHALLENGES4.2 Need for safety net collaboration
Early detection by regulator and timely intervention
Timely failure resolution is paramount
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4. LESSONS AND CHALLENGES4.3 Cross Boarder Issues
Globalization Impact
Establishment of East Africa Common market
Need for a closer collaboration with foreign safety net players
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4. LESSONS AND CHALLENGES4.4 Independence of Deposit Insurance System
Enable public to comprehend roles, duties, responsibilities and limitations
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5. WAY FORWARD
Undergoing reform of its legal and operational framework to enable:
More effectively contribute to countries financial stability
Operate in conformity with international best practices Improve Corporate governance
Greater accountability
More transparency04/21/23 25
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The ENDThank you for your attention