Bank of Tanzania · to regulate and supervise banks and financial institutions and to manage gold...

1995Bank of TanzaniaNo. 1

THE BANK OF TANZANIA ACT, 1995ARRANGEMENT OF SECTION

TitleSectionPART 1

PRELIMINARYShort title and commencementApplication

1.2.3. Interpretation

PART IITHE CENTRAL BANK

Establishment of BankFunctions and objectives

4.5.6. Monetary Policy statements7. Consultations on monetary policy8. Board of Directors9. Composition Of the Board

Disqualification forremoval from the BoardMeetings of the BoardStanding committees

10. membership and

11.12.13. Other Committees14. The Governor and Deputy Governor

Remuneration of the Governor,15. DeputyGovernor and MembersOther officers and staff of the Bank16.

17. Secrecy18. Authorised capital

1

Bank of Tanzania 1995No. 12

General Reserve Fund and allocation of19.profitLosses charged on Consolidated FundFinancial year account and audit

20.21.

Reports22.23. Offices and branches

Agents and correspondents24.25. Exemption from taxes

OrdinanceCompanies a n d26. ItCompanies Decree not to apply.By laws.27.

PART I I ICURRENCY

Unit of CurrencySole right to issue bank notes and coinsDenomination and form of notes and coins.

28.29.30.31. Legal tender32. Lost and damaged currency

Tampering with coinage33.34. Destruction of coins and notes

PART VOTHER OPERATIONS OF THE BANK

35. Banker to the GovernmentsFunctions as banker and fiscal agent36.

No. 1 1995 3Bank of Tanzania

37 Direct advanced and other snort termcredit to the Governments etc.

38. Operation in Government securities etcMeaning of annual budgeted revenueProhibition of other credit to Governmentetc.Banker

39.40.

41. to banks and financialinstitutions

42. Rediscounts, etc43. Loans and advances44. Bank not to extend credit

Reserve requirements in respect of banksLiquid assets ratio

45.46.

47. Information to be furnished by banks andfinancial institutionsPower of the Bankfinancial institutions

48. over banks and

49. Penalty50. Exchange rate policy51. Reserve of external assets52. Dealing in gold and foreign currencies

Exchange control53.

54. Payments agreements55. Fiscal and depository for government's

transactions with international financialinstitutions


Relations with foreign banks56.57. Relations with corporations58. Interest on deposit balances and blocked

accountsAdvice to GovernmentsProhibited operations

59.60.

PART VMISCELLANEOUS

61. Limitation on external holdingsProhibited banking names62.

63. Banks etc. deemed to be public servicefor certain purposesPermanent Commission of Enquiry to haveJurisdiction

64.

65. Immunity.Conflicts66.

Repeal67.68. Savings

No. 16 Bank of Tanzania 1995

PART IPRELIMINARY

1.-(1) This Act may be citedShort titleBank of Tanzania Act, 1995.and

This Act shall come into(2)commencementoperation on such date as the Minister

published theinshall, by noticeGazette, appoint.

Application 2. This Act shall extend to TanzaniaZanzibar as well as to Mainland Tanzania.

Interpretation 3. In this Act, unless the contentotherwise requires-''the Bank'' means the Bank of Tanzania

established by this Act;''bank'' theexcept when used in

"central bank'' andexpressions''foreign bank'' , means a financialinstitution authorized to receivemoney on current account subject towithdrawal by cheque;

''banking business'' means-the business of receiving fundsfrom the general public through theacceptance of money depositspayable upon demand or after afixed period or after notice, orany similar operation through thefrequent sale or placement of'bonds, certificates, notices orother securities, and the use of

(i)


such funds either in whole or inpart for loans or investments forbusiness;any other activity recognised ancustomary banking practice which afinancial institution engaging in

(ii)

described inthe activitiesparagraph (i) may be additionallyauthorised to do by the Bank;

''member'' in relation to the Board, means

the Governor, the Deputy Governor,the Principal Secretaries to the

Treasuries of the Governments or aDirector;

''the Minister'' except where otherwisespecified refers to the Ministerfor the time being responsible forfinancial matters of the UnitedRepublic of Tanzania;

Governments" the''the refers toGovernments of the United Republicof Tanzania and the RevolutionaryGovernment of Zanzibar;

''financial institution'' means any personauthorised by or under the Bankingand Financial Institutions Act,authorised by or under the Bankingand Financial Institutions Act,

''financial institution'' means any personGovernment of Zanzibar;

Governments of the United Republicof Tanzania and the Revolutionary

torefers''the theRepublic of Tanzania;

specified refers to the Ministerfor the time being responsible forfinancial matters of the United

''the Minister'' except where otherwiseDirector;Treasuries of the Governments or a

the Governor, the Deputy Governor,the Principal Secretaries to the

paragraph (i) may be additionallyactivitiesthe

(ii)business;

such funds either in whole or inpart for loans or investments for

1995No. 1 Bank of Tanzania8

1991 to engage in banking businessnot involving the receipt of moneyon current account subject towithdrawal by cheque;

''Director'' means a member of the Boardother than the, Governor, the DeputyGovernor or Principal Secretariesto the Treasuries of theGovernments.

''foreign exchange'' means currencies andunits of accounts other than thecurrency of the United Republic andclaims in and to such currenciesand units of accounts;

''Public authority'' means-

the authority for any politicalsub-division of the United Republic(including any city, municipal,

(a)

town or district council);(b) any common services authority for

which Tanzania is a member withother countries;

agency orany corporation,(C)forenterprise specified the

purposes of this Act by the Bank.

1995 9Bank of TanzaniaNo. 1...

PART IITHE CENTRAL BANK

Establishment and functions of the(a)Bank

Establishment 4. There shall be established aof Bank corporation, to be known as the Bank of

Tanzania, which shall-(a) have perpetual succession and a,

common seal;(b) in its corporate name be capable of

suing and being sued; andsubject to the provisions of thisAct, be capable of acquiring,holding and alienating any movableor immovable property.

(C)

5.-(1) The principal functions of theBank shall be to exercise the functionsor a central bank, and, without prejudiceto the generality of the foregoing, toformulate, implement and be responsiblefor monetary policy, to issue currency,to regulate and supervise banks andfinancial institutions and to manage goldand foreignTanzania.

Functionsandobjectives

ofreservesexchange

1995Bank of TanzaniaNo.110

(2) The Bank shall promote soundmonetary, credit and banking conditionsconducive to the developmenteconomy of Tanzania.

of the

(3) The primary objective of the bankshall be to formulate and implementmonetary policy directed to the economicobjective of maintaining price stabilityconducive to a balanced and sustainablegrowth ofTanzania.

the ofnational economy

The Bank shall promote sound(4)monetary, credit and banking conditions

of theconducive to the developmenteconomy of Tanzania.

6.-(1) The Bank shall at intervals ofMonetarypolicy not more than six months after thestatements submission of each preceding statement,

submit to the Minister a monetary policyStatement for the next six months or forsuch other period as may be specified bythe Minister.

(2) The Minister shall submit to theNational Assembly not later than at its

thesessionsubsequent Statement

1995 11Bank of TanzaniaNo. 1

submitted in terms of the provisions ofsubsection (1).

(3) The Bank shall thereafter atintervals of not more than six monthsafter the submission of We precedingreport submit to the Minister progressreports on the implementation of

and reports on themonetary policyoutlook for the future, and the Ministershall in turn submit the said reports tothe National Assembly at its subsequentsession.

(4) The monetary policy statement tobe submitted under this section shall-(a) specify the policies and means by

which the Bank intends to achievethe policy targets;

(b) state the reasons for adoptingthose policies and means;

(a) contain a statement of how the Bankproposes monetary policy might beformulated and implemented duringthe next twelve months;contain a review and assessment ofthe implementation by the Bank ofmonetary policy during the period

(d)(d) contain a review and assessment ofthe implementation by the Bank ofmonetary policy during the period

the next twelve months;

contain a statement of how the Bankproposes monetary policy might beformulated and implemented during

(a)those policies and means;state the reasons for adopting(b)the policy targets;

specify the policies and means bywhich the Bank intends to achieve

(4) The monetary policy statement tobe submitted under this section shall-(a)

session.

outlook for the future, and the Ministershall in turn submit the said reports tothe National Assembly at its subsequent

monetary policyimplementation of

and reports on the

subsection (1).(3) The Bank shall thereafter at

intervals of not more than six monthsafter the submission of We precedingreport submit to the Minister progressreports on the

199512 No. 1

whichto the preceding policystatement relates.

7.-(1) There shall be regularly heldconsultations between the Governments and

Consultationon monetary

the Governor on monetary policy.policy(2) In the event of fundamental and

irreconcilable differences between theMinister and the Governor over monetarypolicy, the Minister shall be Orderpublished in the Gazette direct theGovernor to formulate and implementmonetary policy along the position of theMinister for a period not exceedingtwelve months or any other period asshall be specified in the Order.

(3) Except as provided hereinabovenothing in this section shall be soconstrued as to limit or affect theobligation of the Bank to carry out itsprimary objective.

(b) Management of the Bankofa Board8. There shall beBoard of

Directors Directors of the Bank and subject to thisAct, , the Board shall be responsible fordetermining the policy of the Bank, for

Bank of Tanzania

Bank of Tanzania 1995 13No. 1

the approval of its budget and for suchother functions as are specificallyconferred or imposed upon the Board bythis or any other written law.

The Board shall consist of-Composition 9. -(1)of the the Governor, who shall be

Chairman;(a)

BoardwhoGovernor,the Deputy(b)

shall be Deputy Chairman;the Principal Secretary to(c)

theofthe TreasuryGovernment of UnitedtheRepublic and the PrincipalSecretary to the Treasury ofthe Revolutionary Governmentof Zanzibar; andSix other directors appointed(d)by the Minister.

(2) The Governor and the Deputyshall be appointed by theGovernor

President and each shall hold office,unless he sooner dies or resigns or.vacates or is removed from his of f ice forgood cause or is disqualified, holdof f ice f or a period of five years andshall be eligible for reappointment:

1995Bank of Tanzania14 No. 1

Provided that no Governor or DeputyGovernor shall hold office for more thantwo terms.

(3) The Directors appointed by theMinister shall each hold office, unlesshe sooner dies or resigns or vacates oris removed from his office in accordancewith section 10, for a term of threeyears, and shall be eligible for re-appointment.

The Directors appointed 'by(4)the Minister under paragraph (d) ofsubsection (1) shall be from amongstpersons who are knowledgeable orexperienced in economics, business andfinance,accountancy

banking, corporate law,and agricultural and

industrial development and otherdisciplines relevant to the functions ofthe Bank.

(5) In appointing Directors of thebank the Minister shall, withoutprejudice to the provisions of subsection(4). have regard to the need to ensurethat the Governmentsrepresented on the Board.

equitablyare

1995 15No. 1 Bank of Tanzania

In considering the appointment(6)or reappointment of a person to theoffice of Director of the Bank theMinister shall have regard, in relationto that office, to the likelihood of anyconflict arising between the interests ofthe Bank and any interests which thatperson has or represents.

Disqualification 10.-(l) No person shall be qualifiedto be appointed a member of the Board, orfor

membership an alternate for a member, if he is:-and removal a member of the National Assembly

or the House of Representatives, ora member of a local government

(a)from the Board

authority;(b) a person who is a civil servant

within the meaning of this term in8the Civil Service Act, other thanthe Principal Secretary to theTreasury of the Government of theUnited Republic and the PrincipalSecretary to the Treasury of the

GovernmentRevolutionary ofZanzibar;a director, employee,(c) officer,

agent orlawyer,consultant,

199516 No. 1 Bank of Tanzania.

bankshareholder or aaoffinancial institution in respect ofwhich the bank may exercise aregulatory power, under Part IV.

A member of the Board or his(2)alternate shall vacate his office if-

he acquires any attribute which,(a)member, wouldnotwere he 4

for appointmenthimdisqualifythisofunder subsection (1)

section;(b) he becomes bankrupt or suspends

with hispayment or compoundscreditors:

or otherwisehe is adjudgeddeclared to be of unsound mind; orhe is convicted of a felony or anyoffence

(0)

(d)fraud orinvolving

dishonesty; orhe is absent, without the leave ofthe Board, from three consecutivemeetings of the Board.

(e)

Meetings of 11.-(1) The Board shall meet as oftenas may be required for the conduct of thebusiness and affairs of the Bank, but not

the Board


less frequently than once in every twomonths.

(2) Meetings of the Board shall beconvened, and notice given in accordancewith the By-laws of the Bank and, in

Governor (ortheaddition, in histhe Deputy Governor shallabsence,

convene a meeting of the Board within a

reasonable time of a requisition in thatbehalf 'by any member of the Board.

The quorum at meetings of the(3)Board shall be six members:

Provided that-there shall be no quorum(a)unless either the Governor or

isthe Deputy Governorpresent at the meeting.where in the opinion of theGovernor (or in his absence,the Deputy Governor) anymatter or business is of anunusually urgent nature whichcannot await the convening ofa meeting consisting of suchquorum (such opinion to berecorded in the Minutes of

(b)


the board) the matter may bedecided at a meeting of theGovernor (or in his absence,the Deputy Governor) and thePrincipal Secretary to the

ofTreasury the UnitedsuchRepublic and

decision shall 'be as validand binding on the Bank as ifit were a decision of ameeting consisting of such

everyandquorum suchdecision shall be reported tothe board at its next regular

A decisionmeeting

reached at a(C)convened under

paragraph (b) of this sectionshall be reported to theBoard at its next regularmeeting.

(4.) The Principal Secretary to theTreasury of the United Republic and thePrincipal Secretary to the Treasury ofRevolutionary Government of Zanzibar mayappoint in writing persons in the civilservice to 'be their representatives at


any meeting of the board. and suchrepresentatives shall, at any meeting forwhich they are appointed, have the powersof the said Principal Secretaries intheir capacities as members of the Board.

(6) A Director who is interested inany matter involving the Bank, or in theexercise or proposed exercise by the bank

of a power, shall declare that interestat every meeting of the board at whichthat matter or the exercise or proposedexercise of the power, is considered bythe Board, and the Director shall not beentitled to attend and vote, or becounted in a quorum present. at a meetingat which the matter or the exercise orproposed exercise of the power in which

the Director has interest is considered.(7) The Chairman (or in his absence

the Deputy Chairman), or save for mattersrelated to formulation and implementation

of monetary policy, the PrincipalSecretary to the Treasury of the United

Tanzania or hisRepublic ofmay require that therepresentative,

decision on any question be postponed toa meeting of the board to be held not


less than seven days after the meeting atwhich the requirement is notified; andwhere such a requirement is made, thequestion shall be postponed, withoutvote, to the next such meeting unless theperson making the requirement consents toits being decided earlier.

Subject to the provisions of(8)subsection (3), no act or proceeding bythe Board shall. be invalidated by reasonof the existence of a vacancy among themembers, and all acts done by a person ingood faith as a. member of the Board shallbe valid notwithstanding that some

indefect his appointment orqualifications be afterwards discovered.

Standing 12. -(1) There shall be a StandingCommittee of the Board composed of theGovernor, who shall be Chairman (or inhis absence, the Deputy Governor, the

Committee

Principal Secretary to the Treasury ofPrincipalthe United Republic, the

the TreasurytoSecretary of theRevolutionary Government of Zanzibar ortheir representatives appointed by themin accordance with subsection (4) of

No. 1 211995Bank of Tanzania

section 11 and not more than two membersof the Board appointed in that behalf bythe Board.

(2) The Board may 'by resolutiondelegate to the Standing Committee uponsuch terms and conditions as the Boardmay determine, any of the functions ofthe Board under this Act, other than thepower-

(a) to approve the budget of theBank under Section 8;

(b) to exercise the functionsrelating to allocation ofprofits under subsection (2)of section 19;

(3) The Committee shall not have thepower to delegate any of its functions.

(4) The Standing Committee shallexercise the function delegated to itunder subsection (2) of this sectionduring the intervals between the meetingsof the Board, and shall exercise thosefunctions in accordance with anydirections given in that behalf by theBoard.

(5) The Standing Committee shall meetas often as may be necessary for the

performance of its functions, and shallPromptly submit to the Board a report, ofits proceedings after each meeting.

(6) The quorum at meetings of theStanding Committee shall be three members

one of whom shall be the Governor or inhis absence the Deputy Governor.

(7) Subject to the provisions of thisAct and to any directions given by theBoard in that behalf, the StandingCommittee may regulate its proceedings.

Other The Board may appoint such13.-(1)other committees of the Board as it maydeem fit. The Board shall, subject tothe provisions of this Act, specify thecomposition and functions of everycommittee appointed under this sectionand the terms and conditions upon which

shall

Committeesof theBoard

itsthe committee exercisefunctions.

(2) Every committee appointed underthis section shall report to the Board onall the proceedings and actions of thecommittee, and the Board may reverse orvary any decision of the committee or may

No. 1 221995Bank of Tanzania

Bank of TanzaniaNo. 1 1995 23

give such directions affecting any actionof the committee as the Board may deemfit in the circumstances of each' case.

(3) Subject to the Provisions of thisAct and to any directions given by theBoard in that behalf, a committeeappointed under this section may regulateits proceedings.

The Governor Subject to the provisions of14.-(1)this Act the management of the Bank andthe direction of its business and affairsshall be vested in the Governor and theGovernor shall, in the exercise of suchfunctions of management and direction,conform 'With the policy determined by the

and DeputyGovernor

Board.(2) The Governor shall have power to

exercise and perform all the functions,powers and duties of the Bank, more thanany function specifically conferred onthe Board, and to authorize expenditurewithin the budget approved by the Board.

(3) The Governor shall be theprincipal representative of the Bank andshall, in such capacity,. have authority-principal representative of the Bank andshall, in such capacity,. have authority-

The Governor shall be thewithin the budget approved by the Board.

Board.

Governorand Deputy

Subject to the provisions ofThe Governor

fit in the circumstances of each' case.

give such directions affecting any actionof the committee as the Board may deem

(3) Subject to the Provisions of thisAct and to any directions given by theBoard in that behalf, a committeeappointed under this section may regulateits proceedings.

Bank of Tanzania 199524 No. l

Bank in itstherepresenttorelations with other institutions,including the Government;

(a)

to represent the Bank either(b)personally or by advocate or othercounsel, in any legal proceedingsto which the Bank is a party;to sign, solely or Jointly withother persons, agreements concludedby the Bank, notes or securitiesissued by the Bank, reports,

(c)

balance sheets and other financialandstatements, correspondence

other documents of the Bank;to delegate any authority providedfor in this subsection including

(d)

the power of delegation to anyotherBoard ormember of the

Bank.officer of theThe Deputy Governor shall-(4)

(a) subject to the generalsupervision of the Governor,be responsible for the day-today management, businessand affairs of the Bank;perform such other duties asmay be imposed upon him from

(b)


time to time by the Governor.The Deputy Governor shall have(5)

full power to act for the Governor in theabsence of the Governor, and the factthat the Deputy Governor so designatedexercises any powers or functions of theGovernment shall be conclusive proof ofthe authority to do so, and no personshall be concerned to inquire whether theoccasion for doing so has arisen or hasceased.

(6) the DeputyThe exercise byGovernor of any function of the Governorshall in the absence of proof to thecontrary, be deemed to be a validexercise of such function pursuant tosubsection (5).

The Governor and the Deputy(7)Governor shall, while in the service ofthe Bank, work full time and shall not,while holding their respective offices,occupy or hold any other paid office; oremployment or engage in any professionalor private enterprise activities:

Provided that nothing in thissubsection shall prohibit either of themfrom-

199526 No. 1 Bank of Tanzania

becoming or acting as a(a)governor, director or member

the Boardof of anyBankinternational or

monetary authority to whichthe Government shall haveadhered or given support orapproval; orbecoming or(b) acting aas

director of any corporationin Tanzania which the Bankmay promote under section 57.

The President may specifically(8)exempt any transactions or activitiesfrom the restrictions of subsection (7).

Remuneration of The Governor and the Deputy15.-(1)Governor shall be paid and accorded bythe Bank such salaries, allowances(including retirement allowances) as maybe determined from time to time by theBoard; and the salary, allowances andother terms of service of the Governor orthe Deputy Governor shall not be reducedor otherwise diminished during their termof office.

the Governor,DeputyGovernor andmembers of theBoard


(2) The Directors of the Bank shallbe paid by the Bank such fees andallowances as may be determined from timeto time by the Board after consultationwith the Minister.

(3) The Bank shall pay the Directorstraveling and other out of pocketexpenses incurred in carrying out theirduties.

Other officers 16.-(1) Subject to the general termsand staff and conditions of service and to the

establishment prescribed by the Board,the Governor shall be responsible for theappointment, termination of appointmentand discipline of the staff of the Bank. (2) The powers of the Board to makeprovisions for the staff of the Bankshall include power to provide forbenefits for or in respect of those ofits staff who die or retire, ''and theirsurviving defendants.

of the Bank

Secrecy Except for the purposes of the17.performance of his functions, or when sorequired or authorized by the Board, orwhen so required by law, no member of the


Board or of the staff of the Bank shalldisclose any information relating to theBank or to any transaction or customer ofthe Bank which he has acquired in thecourse of his duties.

(c) Capital, Reserve and Accounts of theBank

18.-(1) The authorized capital of theBank shall be ten billion shillings. Theauthorised capital of the Bank may beincreased by such amount as shall bedetermined by the board

Authorisedcapital

Noticeby

published in the Gazette.(2) The capital of the Bank will be

subscribed and held only by the UnitedRepublic of Tanzania.

having regard to(3) The Bank maythe amount by which the value of theassets of the Bank exceed its liabilitiesincrease its paid up capital by suchamount payable out of the General Reserve

OrderFund as the Board shall bypublished in the Gazette direct.

(4) The paid up capital of the Bankshall not be reduced.


General 19.-(I) The Bank shall establish andReserve maintain a General Reserve Fund.Fund and (2) Within three months of the close

of each financial year, after allowingfor the expenses of operation during thatyear, and after making provision for anypayment charged on the profits by section20, bad and doubtful debts, depreciationof assets, contributions to staffsuperannuation funds, carry-over into thenext financial year and such othercontingencies and accounting provisions.as are customarily made by banks-(a)

allocationof profits

the Bank shall transfer to theGeneral Reserve Fund twenty fivepercentum of the net profits untilsuch tilue that the total capital ofthe Bank reach a sum equivalent toat least ten percentum of the totalassets of the Bank less its assetsin gold and foreign currencies.Thereafter the Bank shall transfernot less than five percent of itsnet profits to the General ReserveFund;

(b) the remainder of the net profits ofthe Bank shall be paid into the

30 Bank of Tanzania 1995No. 1

Consolidated Fund, subject to thecondition that if at the end of anyfinancialGovernments

year any of the

is indebted to theBank, the Bank shall first applythe remainder of its net profits tothe reduction or. discharge of theindebtedness; and thereafter suchamount as relates to the netprofits of the Bank in the relevantfinancial year shall be paid out ofthe ConsolidatedTreasuryGovernment

Fund to theRevolutionaryof the

Zanzibarof inaccordance with the formula agreedupon from time to time by theGovernments.

(3) (a) Profits or losses from anyrevaluation of the Bank's net assets orliabilities in gold, foreign exchange orforeign securities or any internationallyrecognised reserve asset as a result ofany change in the par or other value ofany currency unit shall be excluded fromthe computation par or other valuecomputation of the annual profits and

All such first-losses of the Bank.losses of the Bank. All such first-computation of the annual profits and

Governments.

accordance with the formula agreedupon from time to time by the

inof Zanzibartheof Revolutionary

Fund to the

is indebted to theyear any

No. 1 1995Bank of Tanzania 31

mentioned profits or losses shall betransferred to a special account to becalled the Revaluation Account.

(b) The lose arising from anyrevaluation as aforesaid shall 'be set offagainst any credit balance in theRevaluation Account and, notwithstandingany other provision of this Act, if suchbalance is insufficient to cover suchloss, the same shall be charged upon, andPaid out of, the Consolidated Fund:

Provided that where in pursuance ofthe Provisions of this subsection, anysum is paid out of the Consolidated Fund,it shall be repaid to the ConsolidatedFund out of any subsequent credit balancein the Revaluation Account and suchrepayment shall be a first charge on thesaid account.(c) Any credit balance in the Revaluation

Account at the end of each financial year ofthe Bank shall be applied first to repayterms of the provisions of subsection (2) insuch prescribe.


20.-(l) The amount of any net lose ofthe Bank in excess the money standingto the credit to the General Reserve Fundof the Bank shall be charged upon, andpaid appropriation than this Act.

Lossescharged onConsolidatedFund

(2) Where, in pursuance of subsection(1) of this section, any sum is paid outof the Consolidated Fund, the Bank shall,out of its subsequent profits repay thesame to the Consolidated Fund, and suchrepayment shall be a first charge on theprofits of the Bank.

The f financial year of the21.-(1)Financial year.account Bank shall be the same as the

Government's financial yearand audit and theaccounts of the Bank shall be closed atthe end of each financial year.

(2) The Bank shall cause true andfull accounts and record to be kept ofall its transactions, and the books ofaccounts and records shall be kept at itshead office and shall be open at alltimes to the inspection of. the members ofthe Board.

(3) Notwithstanding anythingCap. 439contained in the Exchequer and Audit

331995No. 1 Bank of Tanzania

Ordinance, the accounts of the Bank shallbe audited annually by such auditor asthe Board shall appoint.

Reports 22.-(1) The Bank shall submit to theMinister within -three months after theclose of each financial year, a report ofthe Bank a operations throughout theyear, together with the Balance Sheet andthe Profit and Loss Account for that yearcertified by the auditor; and theMinister shall lay a copy of that reportbefore the National Assembly.

(2) After a copy of the report hasbeen submitted to the Minister it shallbe published by the Bank.

(3) In addition to the reportpublished by the Bank pursuant to theforegoing provisions of this section, theBank may issue such other publications asit considers to thebe in publicinterest.

(d) SupplementaryOffices and 23. The Bank may establish offices andbranches branches at such places both within and

outsidenecessary.

Tanzania considersit,asas it, considersTanzania

publicinbe theto


The bank may appoint agents andAgents and 24.correspondents both within and outsideTanzania.

correspondents

Exemption 25.-(1) The Bank shall be exempt frompayment of any taxes, levies or duties inrespect of its profits; operations,capital, property or documents or anytransaction,

from certain.taxes

agreement ordeed,promissory note to which it is a Party.

(2) The Bank shall be exempt from thepayment of stamp or other duties inrespect of notes and coins issued ascurrency under this Act.

Companies 26. The Companies Ordinance and theCompanies Decree shall not apply to theBank, and the Bank shall not be placed inliquidation or wound up except pursuantto and in such manner as may be providedby an Act of Parliament.

Ordinanceand Compa-nies Decreenot toapplyT. Cap. 212and Z.Cap.153

By-laws The Board may make By-laws for27.the good order and management of thebank, but, notwithstanding anythingcontained in the Interpretation and

Act 1972 it shall not beGeneral Clauses Act,necessary for suchpublished in the Gazette.

By-lawsNo. 30 beto

351995No. 1 Bank of Tanzania

PART IIICURRENCY

(a) Currency and its Issue

Unit of 20. The unit of currency in Tanzania shallbe the shilling, each shilling being dividedinto one hundred cents.

currency

Sole right The Bank shall have the sole29.to issue right to issue bank notes and coins in

and for Tanzania and, the bank notes and,coins issued by the Bank shall be theonly legal tender in Tanzania.

bank notesand coins

Denominations 30.-(1) Bank notes and coins issuedand form by the Bank -of notes (a) shaft be in such denominations

of the shilling or fractionsand coinsthereof expressed in cents; and

(b) shall be of such materials, formsand designs, shall bear suchinscriptions and devices, andshall have such other charact-eristics, as the Bank, with theapproval of the Minister, shalldetermine.

Bank of Tanzania 199536 No. 1

(2) The Bank shall give notice in theGazette of the denominations and othercharacteristics of the bank notes andcoins which it issues.

Legal Tender Subject to the provisions of31.-(1)this section

bank notes issued by the Bankshall be legal tender at theirface value for the payment of

(a)

any amount:(b) coins issued by the Bank shall,

if they have not been tamperedwith, be legal tender at theirface value -(i) in the case of a shilling,

or any multiple of ashilling, for the paymentof any amount;

(ii) in the case of coins havinga face value of fifty centsor below, for the payment ofany amount not exceeding tenshillings.

The Bank shall have power, on(2)giving reasonable notice in the Gazette,


to call in any notes or coins issued 'byit on payment (subject to the provisionsof section 32) of the face value thereof;and any notes or coins with respect towhich a notice shall have been givenunder this subsection, shall, on theexpiration of such notice, cease to belegal tender.

(3) Nothing in this section shall beconstrued as precluding the Bank frommaking payment for any notes or coinscalled in accordance with subsection (2)which are delivered to the Bank afterthey have ceased to be legal tender.

Lost and 32.-(l) No person shall be entitleddamaged to recover from the Bank the value of any

lost, stolen or imperfect bank note orcoin, or of any bank note that has beenmutilated, or of any coin that has been

currency

tampered with.(2) The circumstances in which and

conditions and limitations uponthewhich, the value of any lost, stolen orimperfect notes or coins, mutilated notesor coins which have been tampered withmay be refunded as of grace by the Bank


shall be within the absolute discretionof the Bank.

Tempering For the purposes of this Act, a33.

coin shall be deemed to have been

tampered with if the coin has been

with coinage

diminished orimpaired, lightenedotherwise than by fair wear and tear, orhas been defaced by stamping, engravingor piercing whether or not it has beenthereby diminished or lightened.

34. The Bank may melt down, break upor deface any coin which has been calledin or tampered with and may deface ordestroy any bank note which has beencalled in or mutilated.

Destructionof coinsand notes

PART IVOTHER OPERATIONS OF THE BANK

(a) The Bank as Banker to the Governmentsand other public authorities

35.-M The Bank shall be the banker,and shall act as the fiscal agent of theGovernment.

Banker to theGovernments

1995Bank of Tanzania 39No. 1

The Bank may, subject to such(2)arrangements as may be made with theauthority concerned, act as banker andfiscal agent for any Public authority.

Functions 36.-(1) The Bank, in its capacity asas banker banker and fiscal agent of the

Governments or of any public authority,may be the official depository of theGovernments or public authority concernedand accept deposits and effect paymentsfor the account of the Governments orpublic authority:

and fiscalagent

Provided that the Bank may, afterconsultation with the Governments or thepublic authority and the bank concerned,select any other bank to 'be the officialdepository of the Governments or thepublic authority and to -

(a) maintain and operate specialofficial accounts in accord-

ance with arrangements madebetween the Bank and theGovernments or public authority

concerned;act as agent of the Governmentsfor servicing the public debt,

(b)

-


including the issuance of, pay-ment of interest on, and theredemption of, bonds and othersecurities of the Governments-

(c) pay, remit, collect or acceptfor deposit or custody funds inTanzania or abroad;

(d) purchase, sell transfer or acceptfor custody cheques, bills ofexchange and other securities;

(e) collect the proceeds, whetherPrincipal or interest, resultingfrom the sale for, or accruingto the interest of, the Govern-ments or Public authority ofsecurities or other property;purchase, sell, transfer or.accept for custody gold or

(f)

foreign exchange.

(2) The Bank shall be entitled to charge forits services as banker or fiscal agent of theGovernments at such rates as the Bank shalldetermine from time to time.

No. 1 411995Batik of Tanzania

Direct advances Subject to the provisions of37.-(1)and other this section, the Bank mayshort term (a) make direct advances to the

Governments for the purposesof offsetting fluctuationsbetween receipts from thebudgeted revenue and payments

credit to theGovernments,etc.

of the Governments;(b) purchase, hold and sell Treasury

bills issued by the Governmentswhich mature not later thantwelve months from the date ofissue.

Each advance the(2) made toGovernments under this sections shall -

be made solely for the purposeof providing temporary accommo-dation to the Governments andshall, accordingly, be repayablewithin one eighty days; andbear interest at such marketrate as shall be determined 'bythe bank after consultation with

(a)

(b)

the Minister.The total amount outstanding at(3)

any time of advances made and Treasurybills held by the Bark under this section

42 No. I Bank of Tanzania 1995

exceed one eighth of thenotshallaverage budgeted revenues of each ofGovernments as defined in section 39.

Operation in Subject to the provisions of38.-(1)Government this section, the Bank may purchase, holdsecurities bonds orand sell negotiable stocks,

similar debt obligations or otheretc.securities issued by the Governments orwith the guarantee of the Governments, bya public authority, which mature laterthan twelve months from the date ofissue.

The total amount of securities(2)held by the Bank at any time undersubsection (1) of this section shall notexceed the relevant limits set forth inAnnual Monetary and Balance of Paymentstargets Bet forth in the Monetary Policystatement submitted under section 6 andshall bear interest at such market rateas determined by the Bank.

For the purposes of sectionMeaning of 39.-(1)37 the average budgeted revenues of theGovernments shall be the average of theactual collected revenues of the previous

annualbudgetedrevenue

1995Bank of Tanzania 43No.1

three fiscal year(2) Collected revenues snail include

taxes, levies, duties and fees profitsand income from any investment orundertaking and any contribution to therevenue of the Governments from any

the Unitedpolitical sub-division ofRepublic, excluding loans, grants andother forms of economic aid and allborrowing whether short term or longterm.

40. Except as provided in sections 37 and38, the bank shall not extend any creditdirectly or indirectly to the Governmentsor any Public authority.

Prohibitionof othercredit toGovernmentetc -

Financial Relations with(b)other banks

The bank may open accountsBanker to 41. -(1)banks and for, accept deposits from and collectfinancial money and other monetary claims for and

on account of banks and financialinstitutions and may generally act as

institutions


banker banks financialandtoinstitutions.

(2) Subject to the provisions of thisAct the bank may provide additional

andservices to banks financialinstitutions, inter bankincluding ,clearings and the provision of safedeposit facilities.

Rediscounts 42.-(1) The Bank may on such termsetc. and conditions as it may prescribe,

Purchase from, sell to and rediscount onbehalf of banks, bills of exchange,

promissory notes and other creditinstruments:

Provided that the said instrumentsbear the endorsement or acceptance of abank, and mature within 180 days from thedate of acquisition or rediscount by theBank.

(2) The Bank shall set limits ofaccess to the Rediscount facilities.

Loans and 43. 'The Bank may on such terms andconditions as it may prescribe, grantloans and advances to banks and financial

advances

Bank Of TanzaniaNo. 1 1995 45

institutions for a period not exceedingthree months against the collateral of

Credit instruments satisfyingthe requirements of section 42:Treasury. bills satisfying therequirements of section 42;Government securities specified

(a)

(b)

(C)'by the Bank; andOther securities specified 'by(d)the Bank.

For the purposes of this section the word'' financial institution '' shall include theDeposit Insurance Fund established tindersection 23 of the Banking and FinancialInstitutions Act, 1991.

Except as provided inBank not to 44.-(1)sections 42 and 43, the Bank shall notextend credit directly or indirectly to

extend credit

banks and financial institutions.The Bank shall determine and(2)

Publish the rates of interest it willcharge for rediscounting instruments inaccordance with section 42, and forgranting loans or advances to banks andfinancial institutions in accordance withsection 43.

No. I 1995Bank of Tanzania46

Control of banking(C)Reserve 45--(1) Subject to the provisions of

this section-the Bank may, from time totime, require all banks and financialinstitutions to maintain minimum cashbalances on deposit with the Bank asreserves against the deposit and otherliabilities of the banks and financialinstitutions. The Bank may prescribe theform in which such balances shall be

requirementsin respectof banks

held.. ~(z,) The, Bank may prescribe different

ratios for different kinds of depositsand other liabilities and may prescribethe methods of computing the amount ofthe reserves (which ratios and methodsshall apply uniformly to all banks andfinancial institutions). The bank may,at its discretion, exclude certainliabilities from this calculation.

(3) Any requirement or increase inthe ratios prescribed under this sectionshall take effect on the expiration of atleast thirty days notice to the banks andfinancial institutions.

(4) The Bank may impose on any bankor financial institution which fails to


maintain the minimum balances requiredunder this section a penalty charge ofnot less than two percentage points at anannual rate above the interest rateprevailing in the most recent 91 (ninetyone) days treasury bill auction on theamount of the deficiency, and such chargemay be recovered b's? deduction from any,balance of, or, moneys owing to, the bankor financial institution concerned or asa civil debt.

Liquid assets Subject to subsection (2) of46.-(1)ratio and everythis section., every bank

maintainfinancial institution shallliquid assets at levels prescribed by theBank from time to time.

The Bank may Prescribe the

methods of computing the ratio for liquidassets, and may if in the opinion of theBank it is necessary or desirable to doso, vary the ratio prescribed undersubsection (1) or prescribe differentratios for different kinds of deposits orother liabilities:

Provided that any variation of theratio and any Prescription of different

Bank of Tanzania48 No 1 1995

ratios shall apply uniformly to all banksand financial institutions and shall takeeffect on the expiration of thirty days

andnotice to the financialbanksinstitutions.

(3) The bank may impose on any bankor financial institution which fails tomaintain the minimum ratio prescribedunder this section, a penalty charge ofnot less than two percentage Points at anannual rate above the interest rate

prevailing in the most recent 91 (ninetyone) days treasury bill auction on theamount of the deficiency, and the penaltycharge may be recovered by deduction fromany balance of or moneys owing to thebank or financial institution concerned,

or as a civil debt.in this section(4) -the " liquid assets'' of a bankor financial institution meansits cash on hand, balances withthe Bank, unencumbered short termsecurities issued or guaranteedby the Government of the United

(a)

Republic and such other assets asthe bank may specify; and

1995 49No. 1 Bank of Tanzania

the liabilities of a bank orfinancial institution means itsliabilities in Tanzania otherthan the paid-up capitalreserves, the credit balancein the profit and loss account,advances taken from the bank, orsuch other liabilities as theBank may exclude.

(b)

information 47.-(1) Every bank and financialinstitution shall furnish to the bank,to be

furnished at such time and in such manner as may beto the Banks, prescribed by the Bank, such information

as the Bank may require for the properdischarge of its functions andresponsibilities.

(2) The Bank May publish in whole orin part, at such times as it may decide,the information furnished pursuant tosubsection (1) of this section, but noinformation shall be published whichwould disclose the financial affairs ofany customer of a bank or financialinstitution unless his written consenthas first been obtained by the bank.

The Bank may require every bank(3)

50 No. 1 1995Bank of Tanzania

toinstitutionevery financialandpublish its balance sheet in a newspaperof general circulation in Tanzania insuch form and at such frequency as the

Bank may prescribe.(4) The Bank may impose on any bank

or financial institution which fails tofurnish information required under thissection, a penalty charge of not lessthan five hundred thousand shillings perday for every day in which the failurecontinues and the penalty charge may berecovered by deduction from any balanceof or moneys owing to the bank orfinancial institution concerned or as acivil debt.

Power of the 48.-(1) Notwithstanding any provisionto the contrary contained in any writtenlaw, the Bank shall be entitled to accessto computers, books, minutes, accounts,cash securities, documents, vouchers andany other things in the possession orcustody or under the control of the banksor financial institutions which relatesto the business of banks or financialinstitutions.

Bank overbanks andfinancialinstitutions

Bank of Tanzania 1995 51No. 1

(2) 'The Bank may require banks andfinancial institutions to produce forexamination by a person or persons in theservice of the Bank documents andarticles stated in Subsection (1).

(3) After the conclusion of anexamination conducted pursuant tosubsection (1) of this section the Bankshall forward a copy of the Bank's reporton the examination to the Chairman of theBoard of Directors of the bank orfinancial institution concerned and shallrequire the said Chairman to cause thesame to be submitted at a meeting of theBoard offinancial

Directors of the bank ofinstitutions concerned and

thereafter furnish to the Bank within 21days of the date of the report itscomments and details on actions to betaken on the issues raised in the report.

(4) If in the opinion of the Bank anexamination conducted pursuant tosubsection (1) of this section shows thatthe business of any bank or financialinstitution is being conducted in amanner detrimental to the interests ofthe bank or financial institution or the


Public interest, the Bank may.-(a) require the bank or financial

institution concerned forthwithto take such remedial measuresas the Bank may direct, whichin the opinion of the Bank arenecessary or desirable in thecircumstances; or

appoint a person who in theopinion of the Bank is competentto advise the bank or financialinstitution on the necessaryremedial measures, and everyadvice given by a person soappointed shall have the sameforce and effect as a require-ment of the Bank made underParagraph (a) of this subsection,and for the purposes of thissection the advice shall be-deemed to be a requirement of

(b)

the Bank.(5) Every bank and every financial

institution required or deemed to berequired to take remedial measures undersubsection (3) of this section shall

Bank of Tanzania 531995

comply with every requirement affectionits business.

Where any bank or financial49.(1)institution fails to comply with anyrequirement of section 48 the Bank mayimpose on the relevant bank or financialinstitution a penalty charge of not lessthan five hundred thousand shillings forevery day during which non-compliancecontinues, and such charge. may berecovered by deduction from any balanceof , or moneys owing to the bank orfinancial institution concerned or as acivil debt.

(2) The provisions of this sectionshall be applicable notwithstanding theprovisions of any other law currently inforce in Tanzania.

(d) External reserve, gold andForeign exchange

The Bank shall, subject to the50.provisions of this Act, determine theexchange rate policy of Tanzania.

No. 1


51-(1)Reserve of The Bank shall at all timesuse its best endeavours to maintain areserve of external assets at a levelwhich is, at least equal to four monthsimports requirements and the requirementsof international transactions of Tanzania

externalassets

for the same period.Subject to the provisions of(2)

subsection (4) of this section, thereserve of external assets shall consistof any or all of the following -

(a) gold;(b) foreign exchange in the form of -

(1) demand or time depositswith foreign centralbanks or with the Bank'sagents or correspondentsabroad;

(ii) documents and instrumentscustomarily used for themaking of payments ortransfers in internationaltransactions;

(iii) notes or coins;Securities of, or guaranteed by,foreign Governments or interna-

(c)


tional institutions and Organi-tions as are referred to insubsection (2) of section 52.

(3) The Bank shall from time to timedetermine the type and form of foreignexchange and the kinds of securitieswhich may be held in the reserve ofexternal assets pursuant to subsection(Z) of this section.

The Bank may include in itsexternal

(4)anyreserve assetsof

reserveinternationally recognisedassets, assetbeing reservea not

ofsubsectionincluded in (2) thissection, including -

(a) the reserve position ofTanzania in she internationalMonetary Fund. andholdings and special drawingrights of Tanzania, which thebank, after consultation withthe Monetary Fund considerssuitable for inclusion in thereserve!

(b)

56 No. 1 Bank of Tanzania 1995

Dealing in 52.-(1) Subject to the Provisions ofgold and this section, the Bank may -foreign (a) import, export, buy, sell, hold

or Otherwise deal in gold;acquire and transfer balancesin foreign currencies hold suchbalances with foreign centralbanks or with the Bank-8 agentsor correspondents abroad, andinvest such balances in market-

currencies(b)

able foreign securities;acquire, hold and transfer, andeffect transactions Of any kind

(c)

in foreign exchange.(2) The Bank lay engage in foreign

exchange transactions only with -(a) banks;(b) the Governments;

a public authority;(C)(d) foreign central banks, foreign

banks, or foreign financialinstitutions;

(e) foreign governments or agenciesof foreign governments;

(f) international financial organi-sations or institutions;

(C)


any Other person whom the BankMay Prescribe for the purposesOf this section.

(g)

.(3) The buying and selling rates in

transactions authorized by this sectionshall be in accordance with internationalagreements to which Tanzania is a partyor with which Tanzania is associated.

Exchange 53. The Bank shall exercise suchControl functions in the administration of any

law relating to the control of theimport, export, Purchase, sale or Othertransaction in foreign exchange and goldas may arise under such law.

Payments 54. The Bank shall administer anyagreements payment agreement entered into by the

Governments.

Fiscal and 55-(1) The Bank shall be the fiscaldepository agent for all the Governmentsfor transactions with international financial

Organizations or institutions of whichthe Government of the United Republic

Governmentstransactionswith is a member.

(2)international The shall actBank as a


financial depository for the Tanzania currencyholdings of international financialorganizations or institutions of whichthe Government of the United Republic isa member.

institutions

(e) Miscellaneous powers and functionsRelationswith

56- The bank may open accounts for,except deposit from, and collect money

and foreignother monetary claims for and on accountbanksof, foreign central banks, foreign banks

andand foreign financial institutions,may generally act as banker to such banks

and institutions.

Relations 57- The bank may promote and subscribeto, hold and sell shares or as the casemay be, acquire an interest in anycorporation established for the purposesof promoting the development of financial

withforeignbanks

markets or of improving the financialand systemsPayment inmachinery

Tanzania:Provided that the total value of

the bank's holding of any shares orinterest shall not at any time exceedfifty percent of the aggregate of the


bank a paid up capital and of the GeneralReserve Fund of the Bank.

interest on 58- The Bank may, if in its opinion,circumstances render it desirable and prudentso to do, pay interest at such rate and subjectto such qualifications as it may determine oncash balances deposited with the Bank inaccordance with section 45 or on the balancesin any amount with the Bank which is ablocked account within the meaning of theForeign Exchange Regulations, 1992.

depositbalances andblockedaccounts

The Bank may advise theAdvice to 59--(1)Governments on any matter relating to itsfunctions, powers and duties under thisor any other law and shall advise theGovernments when in the Bank's opinion,any such matter is likely to affect theachievement of the principal objectivesof the bank as set forth in section 5.

Government

(2) The Government may require the

Bank to. give its advice on any matterrelating to the functions, powers andduties of the Bank and credit conditionsin Tanzania or any proposals, measures or

GovernmentAdvice to

accountsblockedbalances anddepositinterest on

60 No. 1 Bank of Tanzania 1995

transactions relating thereto, and theBank shall give its advice accordingly.

(f) Prohibited operationsProhibited 60--(1) The Bank shall not-

save as expressly authorizedoperations (a)

by this Act, engage in trade,or own or acquire any directinterest in any commercialagricultural, industrial orsimilar undertaking except inthe course of obtainingsatisfaction for any debt due

I

to the bank;(b) Purchase, acquire or lease

immovable property for anyPurpose except as premises

Bankf or the (includingreasonable provision foranticipated futurerequirements,) or for the useof the members of the Boardor of the staff Of the Bank;guarantee any loan, advance(c)or investment.

(2) Where, in the case provided inParagraph (a) Of subsection (1), the Bank

No. I Bank of Tanzania 1995 61

interest to which thatacquires anyparagraph refers, the Bank shall disposeof the same at the earliest suitableopportunity.

PART VMISCELLANEOUS

General(a)61. The Governments shall not hold orLimitation

external maintain any reserve of external assetsextent fornecessaryexcept to the

working balances.holdings

Save with the written consent of62.the Bank no. bank shall be registeredhereafter under the provisions of any lawin force in Tanzania 'by a name which

Prohibitedbankingnames

includes any of the words ''Central'',.1 and ''Reserve''.''Government

In the discharge of its functionsBanks etc. 63.under this Act deemed and in theto be public

service for administration of any law to whichsection 53 refers, the Bank, and thecertain

purposes members of the Board and of the staff offor theshall be deemedthe Bank,


purposes of the National Security Act,1970 to be persons holding office in theservice of the United Republic.

Permanent In addition to any other persons64.Commission in respect of whom the Permanent

Commission of Enquiry has Jurisdiction,the Permanent Commission of Enquiryshall have jurisdiction to enquire intothe conduct in the exercise of theirrespective offices or authorities, or inabuse thereof, of the members of theBoard and the members of the staff of theBank, and, accordingly, the Bank isspecified for the purposes of subsection

of Enquiryto havejurisdiction

(4) clause 129 of the Constitution of1977.Tanzania,

Immunity 65. Notwithstanding the provisions ofother law, no action or other any proceedings shall lie orbe instituted against any member of the Board of theBank, standing committee or employee f or inrespect of any act or thing done or omitted to bedone in good faith in the exercise of his powers conferredby this Act.


Conflicts If there is any conflict between66.this Act and the provisions of thebanking and Financial Institutions Act,1991, or of any other Act relating to anybank or to the 'business of banking, theprovisions of this Act shall prevail.

(b) Repeals and Savings

67.Repeal The Bank of Tanzania Act, 1965,is hereby repealed.Act No. 12

of 1966

Savings 68. Notwithstanding the repeal of the.Bank of Tanzania Act, 1965 -

all regulations, rules, orders,directions or other subsidiarylegislation made, given or issuedunder that Act and which are inforce before the effective dateshall remain in force after theeffective date until they are

(a)

repealed or replaced bysubsidiary legislation made underthis Act;

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