By Dr Goodluck Temu

The Finance Act of 2024 has amended several pieces of legislation, including the Banking and Financial Institutions Act and the Bank of Tanzania Act, both of 2006. Below is a highlight of the major changes.

Amendments to the Banking and Financial Institutions Act

  1. Amendment of Section 24: The original Section 24(1) (g)(v) dealt with the regulation of interest rates by financial institutions. The amendment replaces “interest-rate” with “interest, profit or return.” This change aims to broaden the scope of the regulation to encompass different types of earnings on financial products, including Islamic banking products that do not use the term “interest” but instead refer to “profit” or “return.”
  2. Amendment of Section 46: Section 46 originally outlined the process for handling abandoned properties by banks. Abandoned property, as defined by Section 47 of the Act, typically refers to financial assets such as bank accounts, securities, and safety deposit boxes that have been left inactive for a certain period without any contact from the owner. After the defined period of inactivity (10 years under these amendments), financial institutions are required to transfer these assets to the government, a process known as escheatment.
  3. The amendment specifies that: 90% of these properties must be submitted to the Consolidated Fund and 10% of the remaining abandoned properties should be deposited in the General Reserve Fund maintained by the Bank. This ensures that abandoned properties contribute to the national treasury and the bank’s reserves, potentially increasing financial stability and government revenue.
  4. This provision will come into effect on 1st January 2025. It is important to note that failure to comply with these provisions attracts fines not exceeding 10 million Tanzania shillings.

Amendments to the Bank of Tanzania Act

  1. Amendment of Section 26 (restriction on the use of foreign currency as legal tender): Previously, Section 26 did not have a subsection (2) regarding transactions in currencies other than the legal tender. The new subsection (2) makes it an offence to transact using any currencies other than those prescribed by the Bank, unless otherwise regulated by the Minister. This aims to strengthen the use of the national currency, ensuring better control over monetary policy and reducing the risks associated with currency substitution. This amendment is necessary to ensure the Tanzania shilling maintains its value by reducing unnecessary demands for foreign currencies, including USD.
  2. Amendments of Sections 32 and 42:These sections originally referred only to “interest”. By changing the term “interest” to “interest, return or profit”, the amendments align with the inclusive language needed to regulate various financial instruments, including those used in Islamic finance, thereby promoting financial inclusivity and reflecting diverse banking practices.
  3. Amendment of Section 35: Originally, this section referred only to the “rate”. Adding “return or profit” after “rate” ensures that all forms of earnings, not just traditional interest rates, are covered. This reflects the central bank’s commitment to a comprehensive regulatory framework that includes modern and diverse financial products.
  4. Amendment of Section 41: This section initially addressed “interest rates”. Including “return or profit” immediately after “interest rates” broadens the regulatory oversight to include all forms of financial returns. This amendment acknowledges the evolution in financial products and the need for regulations to keep pace with these changes.


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the information provided as a substitute for seeking professional advice. The writers or the Firm
are not liable for any use of the information contained herein and do not guarantee the
accuracy of its contents from the date of publication to the date of usage.
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