BANK OF TANZANIA ACT

1 bank of TanzaniaTHE bank OF TANZANIA ACT, 2006_____ARRANGEMENT OF SECTIONS_____PA RT IPRELIMINARY PROVISIONSS ection Title1. Short title and RT I ITHE CENTRAL BANK4. Establishment of the Principal functions of the Regulatory and supervisory functions with respect to clearance and settlement Formulation and implementation of monetary Appointment of Governor and Deputy Board of Disqualification for appointment to the Meeting, quorum, conduct and decisions of the Standing Committees of the of the bank and powers of the Governor and Deputy Remuneration of Governor, Deputy Governors and members of the 0856 --- 0331 XNo. 5 8th June, 2006 ACT SUPPLEMENTto the Special Gazette of the United Republic of TANZANIA No.

2 3 Vol. 87 dated 8th June, 2006 Printed by the Government Printer, Dar es Salaam, by Order of the GovernmentBank of TanzaniaPART IIICURRENCY15. Appointment of officers and other staff of the Capital reserves and accounts of the General Reserve Fund, etc, and allocation of Losses charged on Consolidated Accounting, auditing and Submission of report to the National Exemption from certain Liquidation and Winding up of the Currency and its Issuance of bank notes and Notification of notes and Legal Lost and damaged Destruction of coins and RT I VOTHER OPERATIONS OF THE BANK31. The bank as banker to the Governments and other public Functions as banker and fiscal bank Direct advances and other short term credit to the Governments, Operation in Government securities, Meaning of annual budgeted Prohibition of other credit to Governments, Financial relations with other Re-discounts, Loans and bank as a lender of last bank not to extend bank may purchase, hold and sell Control of banking Liquid assets Submission and publication of Power to conduct examinations of banks or financial institutions.

3 No. 4 2006 bank of Tanzania48. Credit reference Administrative External reserves, gold and foreign Reserve of external Dealing in gold and foreign Exchange Payments Fiscal and depository for Government s transactions, Miscellaneous powers and Relations with private enterprises, organizations and Relations with Interest on deposit balances and blocked Advice to Prohibited RT VMISCELLANEOUS PROVISIONS62. Limitation on external Prohibited banking Banks, etc. deemed to be public service for certain Immunity of members of the Board, staff and employees of the Immunity of the Immunity of the assets managed by the Overriding Waiver for Powers to make Repeal and 4 2006 bank of TanzaniaAn Act to provide for more responsive regulatory role of the bank of Tanzaniain relation to the formulation and implementation of monetary policy; toprovide for the supervision of banks and financial institutions and to providefor other related by the Parliament of the United Republic of TANZANIA .

4 I ASSENT JAKAYA M. KIKWETE President 7th June, 2006NO. 4 OF 2006PA RT IPRELIMINARY PROVISIONS1. (1) This Act may be cited as the bank of TANZANIA Act, 2006.(2) This Act shall come into operation on such date as the Ministershall, by notice published in the Gazette, This Act shall apply to Mainland TANZANIA as well as to In this Act, unless the context requires otherwise Short titleandcomme-ncementApplicationInterepr eta-tionNo. 4 2006 bank of TANZANIA Act means the bank of TANZANIA Act, 2006; bank means the bank of TANZANIA referred to under section 4(1) ofthis Act; bank means an entity that is engaged in the banking business; banking business means the business of receiving funds from the generalpublic through the acceptance of deposits payable upon demand orafter a fixed period or after notice, or any similar operation throughthe frequent sale or placement of bonds, certificates, notes or othersecurities, and to use such funds, in whole or in part, for loans orinvestments for the account of and at the risk of the person doing suchbusiness; Board means the Board of Directors of the bank established by section9 of the Act.

5 Credit reference bureau means an entity specialized in the collectionand sale of credit performance information for individuals andcompanies; credit reference databank means a computerized mechanism createdby the bank to receive and supply information to banks, financialinstitutions, credit reference bureaus and other institutions authorizedby the bank , regarding the credit transactions of customers, includingtheir off-balance sheet operations; clearing system means a set of procedures whereby banks or financialinstitutions present and exchange data or documents relating to fundsor securities transfer to other financial institutions at a clearing houseand includes a mechanism for the calculation of participants bilateralor multilateral net positions with a view to facilitating the settlement oftheir obligations on a net or gross basis; Director means a member of the Board other than the Governor or theDeputy Governors; Deputy Governor means a Deputy Governor appointed under section8(3); ex-officio member means a member of the Board who attends a meetingby virtue of his position.

6 Financial institution means an entity engaged in the business of banking,but limited as to size, locations served, or permitted activities, as prescribedby the bank or required by the terms and conditions of its licence; foreign exchange means currencies and units of accounts other thanthe currency of the United Republic, and claims in and to such currenciesand units of accounts; Government means the Government of the United Republic; Governments means the Government of the United Republic and theRevolutionary Government of Zanzibar; Governor means a Governor of the bank appointed under sectionNo. 4 2006 bank of TanzaniaEstablish-ment of theBank 20068(1); member in relation to the Board means a member of the Board ofDirectors; Minister means, except where otherwise specified, the Ministerresponsible for financial matters of the United Republic; payment system means a system consisting of a set of instruments,banking procedures and typically, inter- bank funds transfer systemsthat ensure the circulation of money; public authority means (a) the authority for any political sub-division of the United Republic,including any city, municipal, town or district council; or(b) any common services authority of which TANZANIA is a memberwith other countries; or(c) any corporation, agency or enterprise specified for the purposesof this Act by the bank .

7 Settlement system means an arrangement established and operatedby, or under the control of the bank for the discharge of paymentobligations and settlement obligations between settlement RT I ITHE BANK4. (1) There shall continue to exist a corporation going by the nameand style of the bank of TANZANIA .(2) The bank of TANZANIA shall be a body corporate and in its corporatename shall (a) have perpetual succession and a common seal;(b) be capable of suing and being sued; andNo. 4 bank of TANZANIA (c) subject to the provisions of this Act, be capable of acquiring, holding and alienating any movable or immovable (1) The principal functions of the bank shall be to exercise thefunctions of a central bank and, without prejudice to the generality of theforegoing, to formulate, implement and be responsible for monetary policy,including exchange rate policy, to issue currency, to regulate and supervisebanks and financial institutions including mortgage financing, developmentfinancing, lease financing, licencing and revocation of licences and todeal, hold and manage gold and foreign exchange reserves of TANZANIA .

8 (2) The bank shall compile, analyse, and publish the monetary,financial, balance of payments statistics and other statistics covering varioussectors of the national economy.(3) In the pursuit of its objectives and performance of its tasks, theBank shall be autonomous and accountable as provided for under (1) The bank shall (a) regulate, monitor, and supervise the payment, clearing andsettlement system including all products and services thereof;and(b) conduct oversight functions on the payment, clearing andsettlement systems in any bank , financial institution orinfrastructure service provider or company.(2) The bank may (a) participate in any such payment, clearing and settlement systems;(b) establish and operate any system for payment, clearing or settlement purposes; and(c) perform the functions assigned by or under any other written law for the regulation of payment, clearing and settlement theBankRegulatoryandsupervi-sory func-tions withrespect toclearanceand settle-mentsystems No.

9 4 2006 bank of TanzaniaFormulationandimpleme-ntation ofmonetarypolicyAppoint-ment ofGovernorandDeputyGovernors7. (1) The primary objective of the bank shall be to formulate, defineand implement monetary policy directed to the economic objective ofmaintaining domestic price stability conducive to a balanced and sustainablegrowth of the national economy.(2) Without prejudice to subsection (1), the bank shall ensure theintegrity of the financial system and support the general economic policyof the Government and promote sound monetary, credit and bankingconditions conducive to the development of the national economy.(3) The Minister and the Governor shall, where circumstances require,consult each other with a view to exchanging information and seekingcoordination on economic and financial (1) There shall be appointed by the President a Governor whoshall, unless he dies or resigns or vacates or is removed from his officefor good cause or is disqualified, hold office for a period of five years andshall be eligible for a re-appointment.

10 (2) No person shall qualify to be appointed as a Governor unless he (a) holds a university degree;(b) has not less than fifteen years experience in the fields of economics,banking, accountancy or finance or law;(c) has been in senior managerial positions in the governmentdepartments or institutions, private institutions or internationalorganizations; and(d) has not been appointed and served as the Governor for twoConsecutive term.(3) There shall be appointed by the President three Deputy Governorswho shall, unless one dies, resigns, vacates or is removed from office forgood cause or is disqualified, hold office for a period of five years and beeligible for re-appointment for a further term of five years only.(4) The appointment of the Deputy Governors shall be made on thebasis that at least one of the appointees hails from either side of theUnited 4 2006 bank of Tanzania9.