By Zephania Ubwani,The Citizen Reporter
IN SUMMARY
- The BoT is concerned that some community banks have not met even the current requirement of Sh250 million start-up capital
Arusha. The Bank of Tanzania (BoT) has insisted that the start-up core capital for a community bank will strictly be Sh2billion by 2017 and that banks which could not adhere to the procedure would be in trouble.
“With Sh2 billion, you are more likely to invest and make profit,” said a senior official of the central bank, Ms Medelina Kiwayo, when speaking to shareholders of the three-year-old Meru Community Bank (MeCoB).
She said, the BoT was concerned that some community banks like MeCoB had not met even the current requirement of Sh250 million, urging them to come up with strategies and action plans which would raise their capital base to suit the new rule.
While start-up capital for establishing a community bank has been raised from Sh250 million to Sh2 billion, the required amount to set up a commercial bank will be Sh 15 billion in three years from the current Sh5 billion.
Ms Kiwayo said, although it was fully operational MeCoB’s capital base does not meet requirements of the central bank, adding that the facility risked some “stringent measures” BoT would impose after the deadline.
The central bank official said with rising operational costs, community banks cannot rely on the Sh250 million capital for lending as well as for investment. “The main business of a bank is to lend money, but you cannot realize and cover other costs with that amount,” she said.
But in a swift response, the chairman of the community bank William Joel Maeda, said every effort was being made by the bank to raise its core capital in line with BoT’s requirement before the March 2017 deadline.
“We have laid down strategies to raise our core capital and deposits. Our officials will soon spread to reach out to our clients and shareholders,” he said.
No comments :
Post a Comment