DAR ES SALAAM May 12 Tanzania's central bank
has revoked the license of a small community bank operating in
the south of the country as part of a drive to clean up the
financial sector, it said on Friday.
The closure of the institution, which had assets of 383.4
million shillings ($171,928.25) at the end of 2014, comes the
same week the central bank shut a commercial bank that was being
investigated by U.S. authorities for money laundering.
The central bank said it had revoked the license for Mbinga
Community Bank Plc, stopped its operations and appointed the
state-owned Deposit Insurance Board as its liquidator from
"The measure has been taken upon determination by the Bank
of Tanzania that the bank is critically undercapitalised and
insolvent," the central bank said.
Mbinga is one of several microfinance institutions licensed
by the central bank. It specialized in serving farmers in the
southern Tanzanian region of Ruvuma.
The East African country has about 40 commercial banks and
10 community banks, but its financial sector is dominated by
just a handful of big banks.
Analysts said lower-than-expected growth in business
activity as a result of tight fiscal measures being implemented
by the government had affected the banking sector.
"The big commercial banks are fine and will survive this
temporary situation, but most of the community banks in Tanzania
are in intensive care unit and could collapse," said Haji
Semboja, a professor of economics at the University of Dar es
The problems for the microfinance banks have been compounded
by a downturn in the agriculture sector after a period of
drought, Semboja said, adding this had led to lower demand for
financial services among farmers.
The central bank said on Monday it had revoked the license
of FBME bank after the money-laundering probe conducted by U.S.
($1 = 2,230.0000 Tanzanian shillings)
(Reporting by Fumbuka Ng'wanakilala; Editing by Duncan Miriri)