Tanzania: Several Banks Mum On Debt Schedule Tips

SOME banks have started to implement the central bank's advice to ease debt payment to clients due to the impact of Covid-19, but some are yet to do so since it is not a one-size-fits-all exercise.

A fortnight ago, the Bank of Tanzania (BoT), announced a deci- sion to ease monetary measures to cushion banks and debtors from the Covid-19 economic impact that include cutting key rates to increase liquidity in the economy.

However, only a handful of banks have come forward to imple- ment the BoT proposal based on a case by case basis and in return the central bank promised some mon- etary flexibility to the concerned banks.

The banks which have acted on the advice include Standard Chartered Tanzania, CRDB, Stanbic, NMB and Letshigo.

The question now lingers as to why other banks are still not doing so, as clients were grap- pling with effects of the deadly global virus.

Though reasons might differ from one financial institu- tion to another, experts argue that the central bank merely made a proposal and didn't is- sue a directive.

Dr Hildebrand Shayo, an economist-cum-investment analyst, said the BoT's proposal was timely, but there could be some implementation delays due to a number of reasons.

"Although some banks have started embracing BoT's recommendations, there are a few areas in which BoT, should have been stricter to ensure banks don't abuse the monetary stimulus package they provided," Dr Shayo told the 'Daily News' yesterday.

The economist said look- ing into those measures given by BoT, ideally, they should have given a timeline that would have helped to reassess the impact of the measures they proposed.

"As of now, it will be dif- ficult to measure if their recommendation to cut rates have led to any impact.

A timeline would have enabled them to identify, mitigate, examine impact and monitor the impact.

"Since implementation remained open, it is going to be difficult," Dr Shayo explained.

Two weeks ago, BoT unveiled various policies approved by the Monetary Policy Com- mittee (MPC), to cushion the economy from the adverse effect of Covid-19.

The policy measures ap- proved include lowering the Statutory Minimum Reserves (SMR), requirements from 7.0 percent to 6.0 percent to provide additional liquidity to banks and reducing the discount rate from 7.0 percent to 5.0 percent to permit banks to borrow from the BoT at a lower cost, thus signalling lower lending rates.

"The Bank of Tanzania will provide regulatory flexibility to the banks and financial institutions that will carry out loan restructuring in a transparent and impartial manner," the BoT statement reads.

"Banks normally have own processes such as decision making arrangement, reporting lines, communication processes and when examining the time the central bank recommended the fruits of the impact may have started to be seen in the coming quarters.

The time banks can seriously implement these recommen- dations, one can only think of the end of the third or the fourth quarter," explained Dr Shayo.

He explained further that the central bank notice came when banks were already planning for the second quarter and any disruption will lead to fail ing to meet targets for the quarter.

The BoT suggestion with- out a timeframe, some analysts said, was like 'a verbal contract [which] isn't worth the paper it's written on'.

However, banks seem to maintain that , repayment or relief should base on case-by-case and not a one-size-fits-all.

NMB for instance offered some relief to its personal, mi- cro, small and medium enter- prise clients, and to corporate customers in sectors whose income and cash flows have been affected by the Covid-19 Pandemic.

NMB Bank acting Managing Director, Ruth Zaipuna, said they had recognized that some customers were operating in a tight rope.

"We intend to provide relief on a case by case basis, as we know that not all businesses and individuals are affected equally.

The focus is on areas that have been severely impacted by Covid-19," noted Ms Zaipuna.

And CRDB granted tour operators a three months relief from servicing their loans as the sector grapples with the pan- demic.

The CRDB Director of Corporate Affairs, Tully Ester Mwambapa, said the bank's move aimed at providing relief to the bank's customers in servicing their loans, particularly during the outbreak of corona- virus.

"The bank is closely moni- toring the situation to make sure that each customer is given a break depending on how much is affected by the challenges brought by the outbreak of Covid-19," she explained.

She said CRDB bank met its borrowers to assess how coronavirus affected them and find ways to help them during and after the pandemic.

Stanbic Bank, on other hand, provided debt repayment holiday for its 265 clients with exposure of over 37bn/-to cush- ion the Covid-19 impact on the economy.

The holiday for between three and six months, accord- ing to the Stanbic, began last month for the tourism sector and now expanded to the energy, transport and SME sectors.

Stanbic Bank Head of Personal and Business Banking, Brian Ndadzungira, said the bank recognised its customers , and was supporting them to operate amid Covid-19.

"This will not only assist our clients with managing their loan repayments but also en- able them to honour payments to their staff and suppliers," Mr Ndadzungira added.

Also, Standard Chartered Bank Tanzania was the first Bank to announce relief measures to tackle the affected by the Covid-19 pandemic to its customers.

The bank's country Head of Retail Banking, Mr Ajmair Riaz, said they had narrowed down the effects to two effective measures of either a pay- ment holiday or extension for loan repayments.

The options are open to individuals who have personal loans or mortgages with the bank, as well as business clients, mainly in the SME sector, who have taken loans from the bank.

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