Tanzania Introduces New Regulations for Compulsory Liquidation of Banks and Financial Institutions

The recent implementation of the Banking and Financial Institutions (Compulsory Liquidation) Regulations, 2024 by the Bank of Tanzania (BoT) signifies a concerted effort to bolster the regulatory framework governing banks and financial institutions in Tanzania. Enacted under Section 71 of the Banking and Financial Institutions Act, 2006 (BFIA), these regulations establish a comprehensive framework for the compulsory liquidation process of banks and financial institutions in the country.

The Regulations grant the BoT the authority to appoint a liquidator in the event that a resolution plan necessitates the liquidation of a bank or financial institution. The appointed liquidator is vested with expansive powers, including the formulation of a comprehensive liquidation plan within thirty days of their appointment, and the responsibility of finalising the liquidation process by presenting a detailed report, submitting audited statements, and publishing liquidation completion details in newspapers.

Furthermore, the Regulations outline the specific responsibilities and duties of the liquidator, as well as the funding of the liquidation expenses. It is pertinent to note that the Regulations are to be interpreted in conjunction with the BFIA, which provides the statutory guidelines for compulsory liquidation and designates the Deposit Insurance Board as the liquidator.

In summary, the Banking and Financial Institutions (Compulsory Liquidation) Regulations, 2024, denote a significant advancement in the regulatory framework for banks and financial institutions undergoing compulsory liquidation in Tanzania. By imparting lucidity, structure, and accountability, the Regulations strive to facilitate the efficient resolution of distressed institutions while safeguarding the interests of creditors and depositors.

The introduction of these regulations exemplifies a positive stride towards enhancing the stability and reliability of the banking and financial sector in Tanzania, whilst ensuring the appropriate protection of all stakeholders’ interests.