Five banks placed under receivership in Tanzania

Tanzania has cracked the whip on financial institutions which pose a risk to the financial system in the country.

Tanzania's central bank has cancelled licences for five banks and placed them under receivership.

The Bank of Tanzania (BoT) said the lenders breached core capital rules.

The banks are Covenant Bank for Women, Efatha Bank Limited, Njombe Community Bank Limited, Meru Community Bank Limited, and Kagera Farmers’ Cooperative Bank Limited.

"The aforesaid banks are critically undercapitalised," BoT said, adding that "continuation of their operations in their current position is detrimental to the interest of depositors and poses a risk to the stability of the financial system."

“We have 58 banks in Tanzania. We want the banking regulator to take action against the failing institutions. We would rather have a few viable banks than many failing ones,” the president said.

Tanzania has been undertaking an aggressive overhaul of its financial industry in recent years which includes termination of contracts and even shutting down businesses it accuses of unfairly exploiting the East African nation.

Since coming to office in 2015, President Magufuli has launched an aggressive and ‘unpopular’ campaign to turn the fortunes of Tanzania which has often put him on a collision part with investors who had once seen him as a darling.

On December, Magufuli laid ownership claim to Indian phone operator, Bharti Airtel Ltd.'s local unit in Tanzania and instructed the Finance Minister Philip Mpango to follow up on the claim.