SOME banks have started to implement the central bank’s advice to ease debt payment to clients due to the impact of Covid-19, but some are yet to do so since it is not a one-size-fits-all exercise.
A fortnight ago, the Bank of Tanzania (BoT), announced a deci- sion to ease monetary measures to cushion banks and debtors from the Covid-19 economic impact that include cutting key rates to increase liquidity in the economy.
However, only a handful of banks have come forward to imple- ment the BoT proposal based on a case by case basis and in return the central bank promised some mon- etary flexibility to the concerned banks.
The banks which have acted on the advice include Standard Chartered Tanzania, CRDB, Stanbic, NMB and Letshigo.
The question now lingers as to why other banks are still not doing so, as clients were grap- pling with effects of the deadly global virus.
Though reasons might differ from one financial institu- tion to another, experts argue that the central bank merely made a proposal and didn’t is- sue a directive.
Dr Hildebrand Shayo, an economist-cum-investment analyst, said the BoT’s proposal was timely, but there could be some implementation delays due to a number of reasons.
"Although some banks have started embracing BoT’s recommendations, there are a few areas in which BoT, should have been stricter to ensure banks don’t abuse the monetary stimulus package they provided," Dr Shayo told the ‘Daily News’ yesterday.
The economist said look- ing into those measures given by BoT, ideally, they should have given a timeline that would have helped to reassess the impact of the measures they proposed.
"As of now, it will be dif- ficult to measure if their recommendation to cut rates have led to any impact.
A timeline would have enabled them to identify, mitigate, examine impact and monitor the impact."Since implementation remained open, it is going to be difficult," Dr Shayo explained.Two weeks ago, BoT unveiled various policies approved by the Monetary Policy Com- mittee (MPC), to cushion the economy from the adverse effect of Covid-19.The policy measures ap- proved include lowering the Statutory Minimum Reserves (SMR), requirements from 7.0 percent to 6.0 percent to provide additional liquidity to banks and reducing the discount rate from 7.0 percent to 5.0 percent to permit banks to borrow from the BoT at a lower cost, thus signalling lower lending rates."The Bank of Tanzania will provide regulatory flexibility to the banks and […]
