The protection of Bank depositors in Tanzania: an analysis of law and practice.

This study attempts to analyse the law and practice relating to protection of banks' depositors. Its main purpose is to examine the law governing operations and practice of banks in exposition of their obligation to the people of this country. To be specific, the study sets out to examine problems that depositors experience particularly when a bank or financial institution is placed under statutory management of the Bank of Tanzania and liquidation. The protected deposit amount applicable to the Tanzania Deposit Insurance Scheme also has been examined to find out if it is sufficient in protecting the interests of depositors. We note that many depositors experience problems when a bank or financial institution is closed, placed under statutory management of the Bank of Tanzania and put into liquidation. During this period depositors are denied access to their accounts and the interests of depositors stop to accrue. This study found that the protected deposit amount as an aggregate credit balance of any account maintained by a customer at a bank or financial institution is Tshs. 250,000/=. This amount is very little and cannot sufficiently protect the interests of depositors. In conclusion, we argue that the introduction of the Deposit Insurance Fund, statutory management and liquidation of banks is commendable. However, since the government is determined to strengthen the banking sector, it is imperative that strict regulations like that of exposure limit and risk management as well as the protected deposit amount are regularly reviewed so as to protect the interests of the depositors sufficiently.