Arusha — There was near-pandemonium outside branches of the closed Meru Community Bank (MeCoB) in Arusha yesterday as customers sought to know the fate of their deposits.
Many of them, including students of higher learning institutions, said they did not know what to do next after being told that their accounts had been frozen.
The bank's branch at Usa River, which also doubles as its headquarters, was again thronged by anxious customers eager to enquire aboutthe fate of their money.
Officials of the financial institution, which was among five banks closed by the Bank of Tanzania last Thursday, were not available to comment on the saga.
Many of the account holders sought more information following reports that Sh1.5 million was the maximum sum that would be released to depositors.
Ms Anitha Haule, a University of Dar es Salaam student, said she did not know where to get financial support to proceed with her studies because she had deposited all her savings with MeCoB.
A leader of two income-generating groups, Ms Christina Urassa, pleaded for urgent intervention by the government, saying the troubled bank was about to raise the required capital.
MeCoB is among five local banks that were closed by BoT for failing to meet the Sh2 billion capital and other requirements. Others were the Convenant Bank for Women, Efatha Bank, Kagera Farmers Cooperative Bank and Njombe Community Bank.
The outgoing central bank governor, Prof Benno Ndulu, was quoted saying account holders in the liquidated banks would receive a refund not exceeding Sh1.5 million.
However, this was disputed by a business consultant based here who said it was unlikely account holders would lose all their money following the liquidation.
"The said amount (Sh1.5 million) will be paid pending on the reconciliation of the accounts. Clients' deposits are insured to cover for eventualities," he said on condition of anonymity.
Commenting on the saga, former BoT governor Edwin Mtei defended the central bank, saying it should be allowed to exercise its powers given the high risks currently facing the financial sector.
He said licensing of many banks and allied financial institutions without effective control mechanisms had its risks, including using deposits for day-to-day operations.
A retired teacher and account holders, Ms Christina Mbisse, said she bought shares worth Sh600,000 and had a fixed account with Sh12 million for her grandchildren, who lost their mother. According to her, during the shareholders' meeting held last month, they were informed that the bank extended loans amounting to Sh4 billion, mainly to income-generating groups. MeCoB was established in 2012 as a community bank to serve Arumeru District, the most populous district in Arusha Region with major agricultural projects.
Major shareholders included the Meru Diocese of the Evangelical Lutheran Church in Tanzania (ELCT) and the Arusha International Conference Centre (AICC).
During a shareholders' conference held in December 2016, the bank was warned it risked being ineligible to operate under the BoT regulations because it did not have enough capital.
The board and management were advised to look for a strategic investor who would pump in the required capital. By then, MecoB had a capital of only Sh400 million against the minimum of Sh2 billion prescribed by BoT needed by the central bank for licensing of a community bank.