The relationship between the Bank of Tanzania and the National Bank of Commerce

This dissertation deals in historical socio-economic context with the development of commercial and central banking and mainly with the relationship between the Bank of Tanzania and the National Bank of Commerce. The first part of this dissertation looks at the development of commercial banking and central banking mainly in Western Europe and England and their introduction to Tanzania during the colonial era. These are dealt with in chapters I and II. In chapter I we examine the historical and general principles of commercial banking and central banking and chapter II deals with the development of banks, banking law and practice in Tanzania. This chapter is divided into two major periods, the period before the Arusha Declaration in 1967, and the period following the nationalisation measures after the Arusha Declaration. The second part of the dissertation looks at the theory and practice of central and commercial banking in Tanzania. In chapter III we examine in detail the functions of the Bank of Tanzania and those of the National Bank of Commerce and how they interrelate. Chapter IV examines the Tanzanian banking system compared and contrasted with some countries with state owned enterprise including banking business. On the whole we observe that banking practice and law were introduced into this country during the colonial era. The same banking practice continued after independence and the Arusha Declaration although there were some institutional changes. We also observe that the National Bank of Commerce and the Bank of Tanzania have to work together because their functions are interrelated. In working together, the Bank of Tanzania acts as some kind of supervisor and need the co-operation of the National Bank of Commerce to function properly.