THE Bank of Tanzania (BoT) has prepared guidelines that will strictly regulate the performance of microfinance institutions and hold them accountable.
Speaking in an exclusive interview with the ‘Daily News’ here over the weekend, BOT’s Bank Examiner from the Directorate of Financial Sector Supervision Gwamaka Charles said the regulations were in the final stages.
“The regulations will require all microfinance institutions to register afresh and in doing so some will lose their current status and others ceasing operating,” he said.
He said if all goes well they would be signed ready for implementation by early next month where the performance of all microfinance institutions will be reviewed and their registration be rechecked.
According to Mr Gwamaka, there were more than 600 microfinance institutions operating in the country at the moment but their re-registration will definitely be reduced based on compliance to the new regulations.
For those with older registrations they will be given one year to register afresh while new registered ones will be asked to resume the registration basing on the conditions in the new regulations guidelines.
Mr Gwamaka said BoT had earlier conducted a survey on the general performance of the microfinance institutions and discovered some had extreme cases hence coming with strict regulations to hold them more accountable.
The central bank will use the new regulations to determine the liquidity of the microfinance institutions and promote other bigger ones to the status of banking institutions while others might suffer deregistration if they are caught with shortcomings beyond repair.
Surveys conducted in Simiyu region and elsewhere in the country show many people still prefer keeping money in their homes which was highly risky.
Some of the reasons for the problem include some people being financial illiterate but a substantial number of others avoiding to be charged higher bank charges and interest rates when they take loans.
However, Mr Gwamaka said BoT will put enabling environment for banks to charge affordable rates although they normally peg them depending on the character of the client.
“The more stubborn you are the higher the rate you are to pay in return,” he said.
Many of the visitors who paid a visit at the BoT pavilion here complained on the issue of interest rates calling for the central bank to lower them to single digits.