A study on reasons causing slow adjudication of cases involving banks in Tanzania and their remedies is almost ready, according to Ben Christiaanse, chairman of the Tanzania Bankers Association (TBA).
Research needs arose from bankers` experiences since liberalisation of the banking and financial sector about delayed intercession of litigations involving banks in the country`s judiciary system, with injunctions becoming order of the day.
Funded by the World Bank the report was now in the final stages and would soon be handed over to the government for consideration.
Christiaanse was addressing a cocktail gathering in Dar es Salaam Thursday evening that was attended by several key stakeholders, including the new Bank of Tanzania (BoT) governor, Professor Benno Ndulu.
Excessive litigation, injunctions and court delays, he said, cause ``situations that make banks incur unnecessary expenses in addition to loss of income and disrupted cash inflows due to delayed payments``.
For small loans, which are now increasingly becoming important products to so many banks that are joining government`s league poverty reduction, the cost of loan recovery may exceed returns to the lending bank, he said.
Yet, bankers are pleased that government has, despite some of the shortcomings, provided an enabling environment for an efficient and effective banking system in the country.
Sources have cited establishment of Commercial and Land Divisions of the High Court, the Law Reform Commission and the Alternative Dispute Resolution (ADR) as the measures which are intended to resolve court cases more expeditiously.
For his part, Deputy Minister for Finance and Economic Affairs Omar Yussuf Mzee who graced the event, lamented that although currently Tanzania has 35 banks and financial institutions in place, only 1.6 million people are customers, which is less than 5 percent of the entire population.
His other concern focused on banking sector`s neglect of agricultural sector, which he said, although contributes 26 per cent of the country`s GDP, yet it receives less than 5 per cent of total lending from the banking sector.
He also appealed to bankers to bring down the cost of borrowing, now as high as 24 per cent, while considering possibility of adjusting interest on savings, currently as low as 2 per cent.
In addition, he called upon bankers to provide more support to the small and medium enterprises (SMEs) whose growth ``makes vital contribution to job creation, income generation and exports growth``.
* SOURCE: Guardian
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