BANK of Tanzania (BoT) yesterday decried an alarming tendency by some authorities to write to financial institutions demanding customer data, describing the trend as erroneous.
BoT Governor Professor Florens Luoga said the habit was frustrating efforts to mobilise deposits while eroding trust on banks.
Professor Luoga said the law privileges the Prevention and Combating of Corruption Bureau (PCCB), Tanzania Revenue Authority (TRA) and Public Leaders Ethics Secretariat, to access depositors’ information but under special procedures.
He told bankers and other stakeholders that the tendency erodes depositors’ confidence on banks and impedes efforts by financial institutions to boost their lending portfolios.
“I as well receive such letter…I just look at them and smile before I respond back, directing the authorities to observe the procedures“If I receive letters demanding information of depositors, how is the situation with the [ banks] CEOs,” Governor Luoga queried as he addressed Tanzania Bankers Association (TBA) meeting.
Tanzania has 53 banks and in recent days the banking sector’s total lending portfolio has reportedly grown at 8.3 per cent by the end of last June from 3.7 per cent in July last year and 1.3 per cent in previous years.
The soft spoken governor said the letters specifically come with threats, directing that failure to comply with the demand will lead to legal action against the banking institution.
Last February, TRA exposed banking details of Full Gospel Fellowship Church, alleged to have billions of shillings in their account contrary to governing regulations. Some authorities enjoy privileges of accessing depositors’ information for investigation on money laundering and related offences.
But, the regulator advised Treasury, BoT and TBA to meet, deliberate and iron out the pertaining challenges to push forward the country’s ambition to attain semi-industrial economy.
Finance and Planning Minister Dr Philip Mpango said the financial sector faces numerous challenges but asked TBA to forward their meeting deliberations to enable the government act promptly on their concerns.
“Yes, there is success but majority Tanzanians have not been reached by financial services, especially in the rural areas,” Dr Mpango said, adding that 28 per cent of the population has no any access to financial services.
The banking penetration remains at merely 16.9 per cent out of the 65 per cent of total financial inclusion.
“We need to have bank branches at each village to accelerate penetration because not all banking services can be conducted through digital platforms,” Dr Mpango said.
The banking sector, according to TBA Chairman Abdulmajid Nsekela, faces many challenges, including court injunctions when recovering unpaid loans, slow pace of issuing national identities, low financial service awareness and inclusion.
“Despite some success in the recent past, still financial inclusion remains low at 65 per cent in July compared to 58 in 2013,” Mr Nsekela said.
TBA said the average lending rate dropped by almost two per cent to 17 per cent in July. NPLs also slid to 11.2 per cent and the aim is to reach five per cent, the industrial bench mark.