Finance

June 2015

Briefing

New banking and

finance regulations
Several banking and finance regulations have been
revoked and replaced by the Bank of Tanzania (BoT).
These new regulations do not dramatically depart
from the provisions of the old regulations, but they
do introduce more stringent rules for banks and
financial institutions in certain areas.
This months finance briefing will summarise some of the key changes which
have taken place to matters concerning:
Foreign exchange exposures
Capital adequacy requirements
Financial disclosure obligations
The management of risk assets

Foreign exchange exposures

In our previous finance briefing, we highlighted the plight of the Tanzanian
Shilling (TZS). Latest BoT exchange rates indicate that the TZS is trading at 2,178
to a single United States Dollar (USD), which is a sharp contrast to the rate in
early January of TZS 1,738 to the USD.
Faced with increasing pressure to resolve the issue, the BoT has revoked the
Banking & Financial Institutions (Foreign Exchange Exposure Limits) Regulations
2008 and put the Banking & Financial Institutions (Foreign Exchange Exposure
Limits) Regulations 2014 (the Foreign Exposure Regulations) in their place.
Although the Foreign Exposure Regulations do not substantively change the
provisions of the 2008 regulations, they have introduced additional obligations on
banks and financial institutions, namely:
Requiring that foreign exchange policies be submitted to the BoT for frequent
reviews
Requiring that intra-day foreign exchange exposure limits be set and observed

Capital adequacy requirements

The main objective of the Banking & Financial Institutions (Capital Adequacy)
Regulations 2014 (the Capital Adequacy Regulations) is to ensure that banks and
financial institutions maintain a level of capital which can protect them from the
losses that arise out of their business activities.
Like the Foreign Exposure Regulations, the Capital Adequacy Regulations are
a replacement to the 2008 regulations of the same name. It is worth noting,
however, that the BoT is giving a 3-year moratorium to banks and financial
institutions to comply with the new requirements under the Capital Adequacy
Regulations.

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Some of the key changes are as follows:

Some of the key changes are as follows:

Issue

Old
position

New position

Issue

Old
position

New position

Minimum core
capital (banks)

TZS 5
billion

TZS 25 billion merchant

banks

Minimum number
of newspapers
for publication of
quarterly financial
statements

1 newspaper

2 newspapers

Time to submit a copy

of quarterly financial
statements to the BoT

3 days, after
the newspaper
publication

5 days, after
the newspaper
publication

Time to publish
quarterly financial
statements

The first 45 days of

a financial quarter

The first 30 days of

a financial quarter

TZS 15 billion commercial

banks
TZS 5 billion microfinance
banks
TZS 2 billion community
banks
Minimum core
capital (financial
institutions)

TZS 2.5
billion

TZS 50 billion development

finance institutions
TZS 15 billion housing
finance companies
TZS 1 billion finance lease
companies

Minimum
percentage of total
risk-weighted
assets

10%

12.5%

Minimum
percentage of off
balance sheet
exposures

12%

14.5%

Financial disclosure obligations

The main objective of the Banking & Financial Institutions
(Disclosures) Regulations 2014 (the Disclosures Regulations)
is to ensure that banks and financial institutions maintain a
level of transparency which will enable depositors, creditors
and the public to make informed decisions.
The Disclosures Regulations replace the Banking &
Financial Institutions (Publication of Financial Statements)
Regulations 2008.

The management of risk assets

The main objective of the Banking & Financial Institutions
(Management of Risk Assets) Regulations 2014 (the Risk
Management Regulations) is to ensure that banks and
financial institutions have adequate credit and investment
policies to identify and manage business risks.
The Risk Management Regulations revoke the 2008
regulations of the same name.
Some of the key changes are as follows:
Issue

Old
position

New position

Conditions for the

extension of an
expired loan

If 10% of the
principal is
repaid

If it has no evergreening elements and

all interests have been
paid, and
It performs satisfactorily
for a minimum of 2
consecutive quarters

Threshold at which
an outstanding credit
accommodation will
become classified as
a loss

271 days

361 days

Further information
If you would like further information on any issue raised
in this update please contact:

Peter Kasanda
Partner, Dar es Salaam
E: peter.kasanda@clydeco.com
T: +255 767 850 056

Teresa Parkes
Legal Director, Dar es Salaam
E: teresa.parkes@clydeco.com
T: +255 767 850 052
Clyde & Co Tanzania
11th Floor, Golden Jubilee Towers
Ohio Street, PO Box 80512
Dar es Salaam, Tanzania
T: +255 768 983 000 / 022
F: +255 222 103 004

Further advice should be taken before relying on the contents of this

summary.
Clyde & Co Tanzania accepts no responsibility for loss occasioned to any
person acting or refraining from acting as a result of material contained in
this summary.
No part of this summary may be used, reproduced, stored in a retrieval
system or transmitted in any form or by any means, electronic, mechanical,
photocopying, reading or otherwise without the prior permission of Clyde &
Co Tanzania.
Clyde & Co LLP is a limited liability partnership registered in England and
Wales. Authorised and regulated by the Solicitors Regulation Authority.
Clyde & Co LLP 2015

CC007709 - June 2015

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