By Kwanta Duglas –
Tanzania’s central bank has announced additional steps to reduce non-performing loans that will target individuals and government officials.
The Bank of Tanzania has been taking steps to stabilize the financial sector, such as combining small banks with insufficient capital.
In March, non-performing loans in Tanzania totaled 9.36% of total loans, nearly double the minimum threshold of 5%.
According to the ministry of finance, the proportion of problematic loans was 10.50 percent in March 2020.
Employees of some banks and financial organizations were directly responsible for “providing loans without following processes, fraud/corruption, or other activities that are tantamount to lack of integrity,” the bank said in a statement late Sunday.
Commercial banks would be compelled to take legal action against such personnel, and the regulator would place them on a blacklist and bar them from working in Tanzania’s financial sector, according to the report.
The central bank announced that financial institutions have been ordered to give information on government employees with non-performing debts to their employers so that necessary action can be taken.
“A high rate of non-performing loans is one of the key causes of high lending rates and may contribute to banking sector instability,” Governor Florens Luoga said in a statement.
Nearly half of Tanzania’s 45 banks were vulnerable to adverse shocks and risked insolvency in the case of a worldwide financial crisis, according to the International Monetary Fund in December 2018.
(Reuters)
