TANZANIA Women’s Bank (TWB) is likely to fall victim of becoming the next bank to be under receivership after failing to meet regulatory standards, including having a capital adequacy ratio of 5bn/.
The Central Bank took over
administration of a small bank, Twiga Bancorp last October for lack of
adequate capital, suspending the senior management and board of
directors.
A latest report issued by the Controller
and Auditor General (CAG) in Dodoma yesterday said the bank (TWB) was
falling into a serious financial crisis and “the central bank should
intervene before it’s fully bankrupt.”
“Trend of day-today bank capital is on
break. TWB must take concrete steps to ensure it keeps up with the
standard capital adequacy ratio,” Prof Mussa Assad told reporters here
shortly after tabling his report in the National Assembly.
The apex auditor explained that the
capital ratio for the bank was below 5bn/as required by the Banking and
Financial Institution Act, 1991.
The government owned bank was created in
2007 and registered as a limited liability company with a sharehold ing
structure comprising of 97 per cent government and 3 per cent private
individuals and entities. It officially started operation in 2009, with a
passion and commitment towards empowering women economically and
socially.
In a report tabled to the parliament,
the CAG found the bank has during the financial year ending June 2016
released loan amounting to 655m/-without adhering to best
practices,including proof of companies loaned.
“The bank did not pay attention to
identity or obtaining collaterals from loan applicants ... This bank was
indeed supposed to be closed,” he said.
The CAG however urged the Bank of
Tanzania (BoT) to track the performance of the bank which has shown all
signs it would become bankrupt. He said the continuation of the
undercapitalized institution poses risk to financial institution.
Last year, BoT took over operations of
Twiga Bancorp. The move came barely four months after President John
Magufuli ordered the central bank to take action against failing banks
which are owned by the government.
BoT Governor Prof Benno Ndulu told a
news conference in Dar es Salaam that Twiga Bancorp had been placed
under statutory man agement of the central bank because its capital had
fallen to alarming levels.
“The bank started with a core capital of
Sh7 billion but continued to record losses amounting to Sh21 billion,”
Ndulu clarified. Speaking at the BoT’s 50th anniversary celebrations in
Dar es Salaam in June, last year, President Magufuli publicly criticized
Twiga Bancorp for being “in the red” and demanded appropriate action
from the central bank.
The president said it was unacceptable
that the government was using taxpayers’ money to pay for operations of
the state-owned bank, which he said had posted losses of up to Sh18
billion.
The CAG report that was released on
Thursday in Dodoma indicates that TWB was heading in the red and that
BoT need to intervene into the matter as soon as possible
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