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Govt: Banking sector stable, decries high NPLs

Govt: Banking sector stable, decries high NPLs

The government has said the banking sector is stable, resilient and profitable with sufficient capital and liquidity.

This was said by Finance and Planning Minister Dr Mwigulu Nchemba while presenting to parliament the economic survey 2021 report and the national development plan 2022/23 to the National Assembly in Dodoma on Tuesday.

“As of April this year, the banking assets amounted to 40.19tri/-, equivalent to a 12.9 per cent increase as compared to the same period the previous year,” he said.

However, bank deposits increased to 28.6tri/-, which is equivalent to an 11.8 per cent increase as compared to the same period in 2020/21.

Nonetheless, bank capital and liquidity have continued to improve, amounting to an 18.4 per cent increase as of April this year as compared to a 10.3 per cent increase in the same period in 2020/21.

Banks have continued to increase the provision of banking services to more beneficiaries using low-cost electronic systems.

However, the Bank of Tanzania (BoT) has continued to strengthen the management of banks and all financial institutions in the country by implementing supportive policies as well as providing regulations to protect resilience of the sector.

The Central Bank has continued with implementation of plans that aim at increasing capital above set targets by laws, which will enable increase in the provision of loans to the private sector and other services to banks.

The banking sector is expected to remain stable and coherent with policies that are being implemented as well as initiatives taken by the government in collaboration with the BoT through improving the business environment and efficiency of financial service providers in the country.

However, the BoT has continued to intensify efforts to reduce the rate of non-performing loans, where as of April this year the rate of non-performing loans decreased to 8.23 per cent compared to 9.77 per cent in April last year.

The BoT continues to closely monitor the existing banking strategies that focus on reducing non-performing loans to not more than 5 per cent.

“Despite these efforts, there are some borrowers who do not honour their obligations, an act that undermines the performance of the sector and the economy,” he said.

“This is due to lending practices that do not comply with regulations and involves lack of professionalism and are some untrustworthy bank employees.

I urge authorities and law enforcement agencies to strengthen their supervisory role in the financial sector,” he said.

He added, “I commend women for compliance in honouring their debt obligations as highlighted in different reports.

Most of the family loans raised by women are usually used on the intended purposes and repaid as planned unlike loans raised by men.

Let us build a borrowing culture that adheres to regulations to strengthen the financial sector and boost the economy,”In some incidents, some untrustworthy bank employees collude with brokers who crave customers’ collaterals and expedite the auction of collaterals even when more than 90 per cent of the loan has been repaid.

“I plead with authorities and law enforcement agencies to closely monitor auctions,” he noted.

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Author: DAILYNEWS Reporter

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