Banking and Financial Institutions (Compulsory Liquidation) Regulations, 2024

  • Développement en droit 14 mars 2024 14 mars 2024
  • Afrique

  • Finances

In a bid to enhance the regulatory framework governing banks and financial institutions, the Bank of Tanzania (BoT) has recently enacted the Banking and Financial Institutions (Compulsory Liquidation) Regulations, 2024 (the Regulations). The Regulations, published under Section 71 of the Banking and Financial Institutions Act, 2006 (BFIA), introduce a comprehensive framework for the compulsory liquidation process of banks and financial institutions in Tanzania.

In this legal update, we highlight key provisions of the Regulations which were enacted on 16th February 2024. 

Key Definitions 

The following are some terms that have been defined under the Regulations:

  • “creditor” means a person who has receivables from or claims to the bank or financial institution under liquidation, including depositors; 
  • “liquidator” means a person appointed by the BoT to wind up the affairs of a bank or financial institution; and
  • “statement of affairs” means audited statement of financial position of a bank or financial institution which contains assets, liabilities, and capital on the date of license revocation which is prepared in accordance with the prevailing financial accounting standards. 

Appointment of Liquidator 

Regulation 4 empowers the BoT to appoint a liquidator when a resolution plan calls for the liquidation of a bank or financial institution. The appointment of a liquidator under the Regulations shall have the same effect as a court-appointed liquidator. 

The estate of the bank or financial institution under liquidation is responsible for covering the liquidation expenses. If the liquidation proceeds are insufficient to cover the administrative costs incurred by the liquidator, BoT will reimburse the deficit. Additionally, if BoT finds that the liquidator has not fulfilled their statutory duties, which includes taking custody and control of all properties and affairs of the institution under liquidation and maintaining a register of creditors, it has the authority to investigate the matter and take action as it deems necessary.

Powers of the Liquidator 

The Regulations grant extensive powers to the liquidator, including:

  • to institute or defend any action or other legal proceedings in the name and on behalf of a bank or financial institution under liquidation;
  • to appoint professionals or any other person to assist in the performance of the duties or provision of services as may be required;
  • to appoint an agent to assist the liquidator in any business as it may be necessary; 
  • to realise assets of a bank or financial institution under liquidation and pay creditors; and
  • to sell the property of a bank or financial institution under liquidation by public auction or private contract and effect transfer of ownership accordingly.

Liquidation Plan

The liquidator must develop a comprehensive liquidation plan for the bank or financial institution under liquidation within thirty days of appointment. The liquidation plan must include:

  • detailed background information of the bank or financial institution under liquidation;
  • description of its assets and liabilities;
  • projected income and expenditure; 
  • detailed description as to the classification of claims and priority order of payment;
  • details of assets, projected sale of assets and projected loan recoveries for the next ninety days from the date of the plan;
  • details of liabilities and projected payment to depositors and creditors in the next ninety days from the date of commencement of the plan;
  • liquidation costs and expenses; 
  • a list of existing contracts to be either continued or terminated;
  • details of existing and potential litigations and related costs; and
  • any additional information deemed necessary by the liquidator.

Closure of Liquidation 

Upon completing the liquidation process, the liquidator must take several crucial steps to finalise the proceedings. Firstly, the liquidator must prepare a comprehensive report detailing all assets realised, payments against claims, the valuer's opinion on unsold assets, and any unclaimed valuables. Unclaimed valuables are surrendered to BoT. Thereafter, they must prepare an audited statement of income, expenses, sources, and uses of funds, submitting it to BoT within thirty days. The liquidator must also publish liquidation completion details in two newspapers. If BoT is satisfied, they will release the liquidator and issue a certificate of release. Finally, the liquidator is required to inform the Registrar of Companies to remove the bank or financial institution's name from the Register of Companies.


It should be noted that the Regulations are to be read in conjunction with sections 61 and 41 of the BFIA which provides the primary legislative rules for compulsory liquidation and for the role of the Deposit Insurance Board as the liquidator.

The Regulations represent a significant step towards enhancing the regulatory framework governing banks and financial institutions undergoing compulsory liquidation. By providing clarity, structure, and accountability, the Regulations aim to facilitate the efficient resolution of distressed institutions while safeguarding the interests of creditors and depositors alike.


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