About Deposit Insurance Board
EstablishmentBoard of Directors of the Deposit Insurance Fund
Legal Framework Governing the Fund’s Operations
Auditors of the Deposit Insurance Fund
The Deposit Insurance Fund is established under section 23(1) of the Banking and Financial Institutions Act, 1991. The Deposit Insurance Board was established under section 24(1) of the same Act, and is responsible for policy formulation and for management and control of the Fund.
i) To be financially, organizationally and functionally independent.
ii) To be operationally responsive to depositors, banks and non banks in Tanzania.
iii) To be professionally managed while maintaining its concern to the welfare of its officers and staff.
To enhance public confidence in the banking system through provision of adequate insurance protection or coverage to depositors of banks and non banks in the event of insolvency of the same.
a) Insurance assessment and premium collection from banks and non banks and review of insurance coverage from time to time.
b) In collaboration with Banking Supervision of the Bank of Tanzania, the Fund:-
i) Monitors the health of banks and non banks, examines and identifies risk areas or weaknesses through off-site and on-site examination.
ii) Institutes corrective measures to prevent closure of banks and non banks through restructuring/rehabilitation or provide financial assistance to distressed banks and financial institutions.
c) In the event of a closure of a bank or non bank, the Bank of Tanzania, may appoint the Deposit Insurance Board to deal with Claims, Receivership and Liquidation. Thus through the Fund, it institutes take over and control of all assets, liabilities and affairs of the closed banks or financial institution, liquidation of assets, settlement of claims for insured deposits and financial settlement with creditors. In executing this function the Fund may appoint agents to do so on its behalf.
Legal framework governing the Fund’s operations
1. Under section 23 of the Banking and Financial Institutions Act, 1991 it is stipulated that:-
a) The Fund shall consist of:-
i) Contributions to the Fund by licenced banks and financial institutions.
ii) Income derived from investment and credited to the Fund.
iii) Money borrowed for purposes of the Fund.
b) The monies constituting the Fund be placed in an account with the Bank of Tanzania and invested in such manner as the Board shall deem appropriate. Currently, monies are invested in Treasury Bills with 91, 182 and 364 days and investments in Bonds up to 5 years.
c) Payments out of the Fund shall consist of administrative expenses of the Board, repayment of money borrowed by the Fund and payments made in respect of protected deposits.
2. Section 25 of the Banking and Financial Institutions Act, 1991 provides that:-
a) All banks and non banks, savings and credit societies or schemes accepting deposits from the public which the Bank has extended the application of the provision of the Banking and Financial Institutions Act, 1991 shall be contributors to the Fund.
b) The amount of a contribution to the Fund is set to be not less than one percent of the average total deposit liabilities of the bank or financial institution during the period of twelve months prior to date of the notice. However, the Minister for Finance after consultation with Board by order, may amend the minimum and maximum amounts of contributions. Currently the amount of a contribution is set at one tenth of one percent of the average of the bank or financial institution total deposit liabilities during the past 12 months from the date of notice.
c) A bank or financial institution which for any reason fails to pay its contribution to the Fund within the period specified in the notice, is liable to pay to the Fund a penalty interest charge not exceeding one-half percent of the unpaid amount for everyday outside the notice period on which the amount remains unpaid.
d) If it appears to the Fund that the affairs of a bank or financial institution are being conducted in a manner detrimental to its own interests or interests of the depositors, the Fund is empowered to:-
i) Increase the contribution of that bank or financial institution beyond the maximum set in (b) above
ii) Terminate the protection of the deposits of such bank or non bank.
3) Section 26(1) of the Banking and Financial Institutions Act, 1991 concerns protection of deposits and payments out of the Fund, by stipulating that:-
a) the amount of protected deposit shall be the aggregate credit balance of any amounts maintained by a customer at a bank or a financial institution less any liability of the customer to the bank or financial institution to the extent determined by the Minister for Finance from time to time by order published in the Gazette. The amount of protected deposit raised from TZS 250,000.00 up to TZS 500,000.
b) upon a bank or financial institution becoming insolvent, a customer of that bank or financial institution is required to lodge his/her claim with the Board before payment is made out of the Fund of any protected deposit which he would but for the insolvency have been paid had he demanded payment from the insolvent bank or financial institution.
c) before paying any claim lodged with the Board, the claimant is supposed to furnish the Board with such documentary proof as may be proper to show that he is entitled to payment out of the Fund.
d) upon payment of a protected deposit the Fund shall be entitled to receive from the bank, financial institution or liquidator, as the case may be, an amount equal to the insolvency payment paid by the Fund on account of its subrogation to the claims of any depositor.
Board of Directors of the Deposit Insurance Fund
The Board consists of:-
a) the Governor of the Bank of Tanzania - Chairman
b) the Permanent Secretary to the Treasury
c) The Principal Secretary to the Ministry of Finance of the Revolutionary Government of Zanzibar, and
d) three other members appointed by the Minister for Finance
Auditors of the Deposit Insurance Fund
Office of the Controller &
Auditor General,
Samora Avenue/Ohio Street
P.O. Box 9080,
Dar es
Salaam.
Tel. 255 (0) 22 115157/8
E-mail : ocag@nao.go.tz
This page was last updated on 05/Aug/2008