DIB conducts liquidation in terms of provisions of section 41 of the Banking and Financial Institutions Act, 2006 when appointed by the Bank of Tanzania (BOT). Currently, DIB is liquidating a total of nine (9) banks which were closed by BOT at various times. The failed banks under liquidation and their respective years of closure are: Greenland Bank Tanzania Limited (2000); Delphis Bank Tanzania Limited (2003); FBME Bank Limited (2017); Mbinga Community Bank Plc (2017); Njombe Community Bank Limited (2018); Meru Community Bank Limited (2018); Covenant Bank for Women (T) Limited (2018); Kagera Farmers’ Cooperative Bank Limited (2018) and Efatha Bank Limited (2018).
The liquidation exercise of Greenland Bank (T) Limited and Delphis Bank (T) Ltd is in the final stages while liquidation of the remaining seven closed banks is ongoing.
Upon DIB being appointed the liquidator, it starts with reimbursement of insured deposits simultaneous with liquidation. DIB in its capacity as a liquidator conducts collection of assets and payment of liquidation proceeds to creditors of the failed bank or financial institution in accordance with the provisions of the Banking and Financial Institutions Act, 2006 and the Companies Act, 2002.
Debt collection is one of DIB responsibilities in the liquidation exercises which includes safe keeping of the assets of all banks under liquidation. For effective discharge of the liquidation exercise, DIB has been following up the repayment of loans from the borrowers and in some cases, it has contracted debt collectors and filled recovery suits against loan defaulters. However, the loan/debt collection exercise has been hampered by a number of challenges among others court cases applications for injunctive orders/counterclaims against the liquidator and unresolved cross border issues for the case of FBME Bank Limited forms a major stumbling block.
Disposal of Assets
Disposal of Assets involves sale of assets by public auctions after valuation exercise has been conducted and the respective assets have been given liquidation price. The DIB through the appointed auctioneers had conducted number of auctions during the liquidation period of each bank under liquidation.
Collections from Other Sources
DIB also collects assets from other sources including recovery of balances in form of deposits and placements in local and correspondent banks abroad and balances due from electronic cards transactions (e.g. VISA and MasterCard). Additionally, DIB normally invests excess funds realized from collection of debts, sale of assets and from other sources in government securities (i.e. treasury bills and bonds) aimed at preserving value through investment returns in form of interest income. The returns serve to meet part of liquidation expenses and increase liquidation funds available to creditors.
Distribution of Liquidation Proceeds to Creditors
DIB continues with payment of liquidation proceeds to the depositors with claims above the insured limit and other creditors of four banks. The distribution ratios of the available funds to depositors of the four banks were Njombe Community Bank Limited (100%), Meru Community Bank Limited (69%), Mbinga Community Bank Limited (33%) and Kagera Farmers’ Cooperative Bank Limited (43%). In relation to other banks under liquidation, processes are underway to pay their depositors and creditors.