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Banking sector remains sound, resilient

Banking sector remains sound, resilient

THE banking sector performance has remained stable, resilient, adequately capitalised and profitable, with satisfactory level of liquidity.

According to the Bank of Tanzania (BoT) Monetary Policy Statement for 2020/21, the quality of assets of banks improved, as the ratio of nonperforming loans to gross loans declined to 9.3 per cent in December 2020 from 10.8 percent in June last year.

The Central Bank also continued to strengthen risk management practices in the financial sector by implementing various policies and regulatory reforms to safeguard the stability of the industry, including directing banks to implement capital restoration plans and adhering to the regulatory requirements.

The banking sector is expected to remain safe and sound in line with ongoing policy, prudential and regulatory measures undertaken by the BoT towards improving business environment and efficiency in financial services delivery. Additionally, the BoT continues to monitor the quality of banks’ assets with a view of reducing non-performing loans to the desired level of 5 per cent.

Payments, clearing and settlement systems continued to operate efficiently with growing utilisation of digital channels in financial services delivery. Utilisation of interoperability capability in mobile money services continues to operate smoothly contributing to overall growth of total mobile money transactions.

The BoT has implemented the Financial Services Registry (FSR) System for mapping financial services access points across the country that will facilitate assessment of the potential areas attractive to policy makers, regulators and investors.

The FSR will also enhance financial inclusion as it will facilitate consumers of financial services to know the location of access points/ services and make informed financial decision.

The BoT is developing a Tanzania Instant Payment System (TIPS), which is a single platform that will connect different payment systems to facilitate easy, fast, cost effective and secured instant payments.

The platform will facilitate interoperability of digital financial services amongst payment service providers, reduce use of cash transactions, enhance effective governance, and promote financial inclusion.

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