Tanzania's National Bank of Commerce hit with fine over data rules breach

National Bank of Commerce Ltd branch. The bank is majority owned by South African lender Absa. PHOTO | THE CITIZEN  

In Summary

• National Bank of Commerce Ltd is the second bank in two months to be penalized for such a breach.
• The country’s financial services sector has been hit by a spike in bad loans, which have stifled the growth of credit to the private sector.
• The central bank fined Diamond Trust Bank Tanzania Limited 1 billion shillings last month for breaching the regulatory rules on data and service availability.

It said the rules were aimed at ensuring banks’ operations when they are cut off from accessing data centres of parent companies located outside Tanzania.

“The Bank of Tanzania has noted with serious concern that NBC did not implement the directive for establishing a secondary data center in the country, despite confirming in writing that it has implemented the directive,” it said.

“In addition to the penalty explained above, additional charge of 10 percent of the penalty amount will be imposed to

NBC for every month in which the non-compliance continues.”

NBC, majority owned by South African lender Absa, was not immediately available for comment.

The central bank said it has issued three previous circulars to banks and financial institutions since 2014 on the requirement for primary or secondary data centers to be located in Tanzania instead of on servers abroad, but some lenders were yet to comply.