BANK OF TANZANIA (B.O.T) REACTIONS IN CORRESPONDENCE WITH ECONOMIC CHALLENGES BROUGHT BY THE CURRENT GLOBAL PANDEMIC DISEASE (COVID 19) IN TANZANIA.
By considering the current economic challenges which has been subjected by the current World pandemic Disease (COVID 19) in Tanzania, The Policy and Finance Committee of Tanzanian central bank board has adopted various policy measures aimed at addressing the impact of the COVID 19. The purpose of these measures is to maintain the stability of the financial sector and access to financial services for a variety of economic activities.
Among the measures imposed includes:-
i. Download the Minimum Legal deposit amount required deposit to the Bank of Tanzania.
The central bank to download the minimum legal limit for the deposit portion to be deposited with the Central Bank of Tanzania from 7% to 6% minimum deposits as from 8th June 2020. This change is expected to increase liquidity in the banking sector.
ii. Downloads the interest rate charged on the bank to borrow the central bank.
The interest rate charged on the bank to borrow the central bank has been reduced from 7% to 5% immediately from 12th May 2020. This measure will enable to increase the bank's lending to central banks at lower interest rates and thus reduce the interest rate on customers.
iii. Central bank increase relief on securities and government securities used by the bank as collateral when borrowing from the central bank
The relief is achieved by reducing the bond rate by picking up 10 percent to 5 percent for short-term bonds and from 40 to 20 percent for securities beginning May 12, 2020.This move will increase the bank's ability to borrow from the central bank at a higher rate than before.
iv. Provision of relief to banks and financial institutions that will provide relief on the repayment of loans based on transparent bias.
To benefit from this relief, the central bank has advised banks and financial institutions to evaluate the impact of the COVID 19 explosion, restoring credit, negotiating with creditors, and providing credit recovery as it may seem appropriate.
v. Increase daily transaction rate per customer
To encourage the use of digital financial services in conducting various transactions, Companies providing online financial services increase the daily transaction rate per customer from shillings 3,000,000 to shillings 5,000,000 and daily savings per customer from shillings 5,000,000 to shillings 10,000,000.
In addition, banks have been encouraged to increase the use of digital transactions, including the use of payment machines and electronic banking.