Q&A – 6 August 2018

Funds stuck as bank goes into administration

I have my savings in a bank that is now under the Central Bank’s administration. Infact a few weeks ago the bank’s manager called me offering a very good interest rate and I deposited my savings there. I now require the funds for an urgent medical emergency- can I have my funds back on humanitarian grounds? What will now happen? Will borrowers from the bank not have to pay back?
CT, Dar

The FB Attorneys QnA team answers this question immediately as this is a burning issue and we have received over half a dozen similar questions.

The Bank of Tanzania (BoT) has indeed taken one top tier bank into its possession. This is a process where the BoT appointed statutory manager will look into how he can rescue the bank from failing amongst others, and to ensure that the position of depositors and other stakeholders are not affected.

Section 56(1)(g)(iii) of the Banking and Financial Institutions Act 2006, which is the provision that the BoT has used to take possession, states the following: the Bank may take possession of any bank or financial institution if the bank or financial institution is conducting its business in violation of any law or regulation, or is engaging in any unsafe or unsound practice that is likely to cause insolvency or substantial dissipation of assets or serious prejudice to the interests of depositors or the Deposit Insurance Fund.

The BoT’s circular states that the bank shall not be open for business for at least 90 days, meaning that no depositor will be able to access any amounts from the bank for that period. There is no provision for humanitarian grounds for withdrawal of funds that you deposited. In short for 90 days there is nothing you can do to withdraw funds.

During the 90 days the statutory manager will investigate the banks affairs and its books of accounts and thereafter is also entitled to ask for more time. The statutory manager may also recommend that the bank be recapitalised or be declared insolvent and hence permanently shut down, where depositors will likely lose out. It is too early to predict what will happen. It is a waiting game and in this period it is unlikely that you will be able to sue your bank.

On insurance, depositors are covered by the depository scheme but the maximum amount you can get, in the event the bank goes under, is only TZS 1.5M which is not very significant. Some people are under the impression that they have insurance for 100% of funds deposited, which is not the case.

As for borrowers, normally there is a clause in their loan agreements that allows the bank to recall the moneys lent. A borrower cannot walk away Scot free. Infact borrowers will also be inconvenienced as loans may be recalled.

Validity of international drivers licence

I am new to Tanzania and have a number of questions on traffic laws in the country. What law prescribes the minimum age to drive a car in Tanzania? I am able to afford a car and want my matured 12 year old boy to start driving a car that I intend to buy for him. Is an international licence valid in Tanzania? As an expatriate do I need a local licence? And if I get into an accident must I stop at the place of accident? Please guide.
YU, Dar

The Road Traffic Act is clear and states in section 25(4) that a driving license shall not be issued to any person who is under the age of eighteen years, except in respect of a moped (light motorcycle). This Act further provides that in respect of a bus or a heavy commercial vehicle the person must be over twenty one years and should have acquired driving experience for a period of not less than three years.

No matter how wealthy you are and how smart your son is, he cannot get a driving license in Tanzania. We advise you wait until he has reached the prescribed age to apply for a driving license. Otherwise any move at the moment to get the license will be contrary to the aforesaid provisions of the law and is imprisonable.

As for validity of international licences, the same Act provides that any person who holds a valid international driving licence or a foreign domestic licence issued in accordance with the 1949 Geneva Convention or with the 1968 Vienna Convention, shall have that licence recognised as being valid under this Act. However such validity is only for six months, and as an expatriate on a two year work permit you must get a local drivers licence.

To answer your last question on whether you need to stop should there be an accident, again the same Act states that (1) Where an accident arising directly or indirectly from the use of a motor vehicle or trailer occurs to any person or to any motor vehicle or trailer or to any other property, the driver of the motor vehicle or trailer shall stop if, having regard to all the circumstances, it is safe for him to do so and shall ascertain whether any person has been injured, in which event it shall be his duty to render all practicable assistance to the injured person: Provided that where the driver does not stop because it is not, having regard to all the circumstances, safe for him to do so, he shall immediately report the accident at the nearest police station.

Hence you must stop if are involved in an accident unless it is not safe for you to do so, and in that case you must report to the nearest police station.