Access to loan is facilitated after examination of Tanzania ID card

By DOROTHY NDALU

Bank of Tanzania (BoT) makes it easy for banks to lend in new policy, removing the requirement for a national ID card to register bank agents while lenders would only need 18 months of experience commercial.

According to the governor of the BoT, Professor Florens Luoga, this policy should contribute to an increase in loanable funds to banks through the mobilization of deposits. The BoT also intends to lower the rates on loans to the private sector.

Prof Luoga said the bank introduced special loans in the amount of tsh1 trillion ($ 432 million) to banks and other financial institutions for on-lending to the private sector.

“The Bank of Tanzania will provide a special loan to banks and other financial institutions at 3% per annum for the pre-financing or refinancing of new loans to the private sector,” he said.

Banks wishing to access the special loan facility will have to apply interest rates not exceeding 10 percent per annum on loans to the private sector. This measure aims to increase bank liquidity and reduce lending rates.

“This gives the opportunity for banks to extend more credit to the private sector than before,” said Prof Luoga.

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The BoT also announced a decrease in minimum reserve requirements (SMR), adding that banks that grant loans to agriculture will be eligible for a reduction in the amount of the SMR, equivalent to the loan granted. Prof Luoga said banks will need to prove that they lend to farm businesses at an interest rate of no more than 10 percent per year.

Bank BoT said that before the Covid-19 outbreak, macroeconomic conditions in Tanzania were stable.

The executive director of the Tanzania Private Sector Foundation, Francis Nanai, said companies were under financial pressure due to a slowdown in economic activity.

About Alexander Estrada

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