1.0  INTRODUCTION

You should be familiar with the following areas

  • Meaning of Bank and Banking law
  • History banking in pre capitalist societies
  • Development during capitalism
  • Development of Banking in Africa
  • East Africa
  • Tanganyika
  • Legislation governing Banking

1.1 MEANING OF BANK AND BANKING LAW

1.1.1 MEANING OF BANK

Bank is monetary institution deals with depositing and withdrawal of money and keeping records of money to person or company.

OR refers to an institution which does business in money or an entity that engage in banking business

1.1.2 BANKING LAW

Banking law is the broad term for laws that govern how banks and other financial institutions conduct business.

1.2 HISTORY OF BANKING

1.2.1 PRE COLONIAL

The rise of Banking one should consider principle ownership those days in order to survive people had to belongs to community, where by everything belong to community, so the ownership of the means of production was basically fall under communal mode.  In other words, property was communally owned  in order to enjoy property one has to be a member of community, being member of community one entitle to life food, life shelter where that community took care of the sick people old and pregnant woman .During this era members of community produce was social necessary product  (S N P). No one was assumed of serving if he decided to pull out of member of community. Member depended upon and assisted each other with expectation to receive assistance when a need arose, after some years there were improvement in product forces mainly on innovation discovery and experience of the people based on skills. These improvement taken together enabled a community to produce not only social necessary product but also to produce social surplus product (S .S. P). The use of surplus product they exchange to get other product keep or stored for use in future. These social surplus products stored in Shrines, Temples Palaces. They stored in palaces, shrines and temples were safe and respected, and very well guaranteed  this institution accepted of the surplus product, be they social or individual and so they become depositions These shrines, Temples and places began to give loans and  charged interests.

In 8th century the use  of coins were began to use however the use of coins associated with differ minted its own coins not – only that each country refuse to recognize coins of another country. This problem gave rise to the group of people know as money changers who could be found in each city state could profound the function to kept money of different city state and exchange money changer to get the money they want.

             So these money changers individual person who occupied deposit who  made  payment who traded money become the  first modern bank. Later these individualism changer had to be replaced with company because of consideration   money as there was a bigger exchange of money. Thus pre register of Banking must be commodity production, money, under spread use of money, trade in money. These money changers thus become the early banking institutions composed of individual persons.

1.2.2 CAPITALISM

During the capitalism mode of  economy was characterized by competitive in order to comp lace  effective one who produce effective one who produce good so these more changes thus became the 1st  early banking institutional composed of industrial person, therefore grew many commercial banks competing .The competing commercial banks were doing business blindly especially by lending out money without any control, uncontrolled lending was dirties to the anomy as the banks collapsed one after another. The state had to intertwine remedy the situation and established central bank which were required to regulate and central activities of commercial banks operations that new state established of cultural banks

1.2.3 AFRICA

When the economy of Africa was not ready for bank is what we called  colonialism there was colonialism because capitalism had to out flow of its boundaries come to be known as imperialism .So capitalist state began to go out of their country when  they  could sell their product, they started by sending companies to Africa. These showed people lowed our chief and un knowingly, they entered into contracts or treats and as facts is the save as master who sending the agent later the  partition of Africa .

   After establishing the colony they set up a government which included  Army, judiciary, prison  so in the colony bank did not emerge  but were imposed in otherwise substance economy slowly subsistence economy transformed  in money economy .In addition to the colonial government other strategic  institution s to serve it include Banks, Insurance, Assurance companies. Laws in order  to protect and serve capital  exported to backward countries, there were two categories of laws imposed Regulatory law and Substantive law Regulatory  law deals with such aspect of formation ,regulation stamp duty law and Substantive law  these included the substance of the commercial law principle of equity and statutes of general application[1] .Under substantive law were also included  real statutes , statute primary any reluctant  body of commercial law which duty was custom. Example of statute introduced, Zanzibar 17/8/1911, Malawi 11/8/1902, Zimbabwe 7/7/1897, Uganda 11/8/1902,Kenya 12/8/1897,Tanganyika   22/07/1920,States in pari materia ,Relevant  body of commercial law usages.

1.2.4 EAST AFRICA

Ever increasing trade behavior Britain and East Africa hence  was a demand for bank  services  by the expatriate  population and gut officials so they wanted commercial bank to establish in order  them to finance. Was to avoid cheeping currency inspects. There was therefore a need to establish commercial banks was facilitate trade satisfy credit demand of expatriate population and government officials do away with the problem of shipping currency in specie.         

                Establishment of commercial bank   link  with colonialism. The operation  of these banks had the effect of accelerating a shift from substance farming to production for exchange on the international market.

              Elements ofcommercial Bank of East  Africain Uganda there was The Uganda Commercial bank  establish in 1965 by statute in Tanzania there were The material cooperative Bank established in 1964 by statute , The Tanzania Bank of commerce Limited 1965-took  the Business of Ottomen.

1.2.5 TANGANYIKA

             The evolution of banking sector in Tanzania can be broken down in into three main. These are:-Colonial era and the period of independence, Post Arusha Declaration and the period after 1991.

1.2.5.1 COLONIAL ERA

               During colonial period, commercial banks were dominant financial institutions, during the German rule there were two commercial banks established in Tanganyika , Many for security colonial rulers namely. The Deutech ostafrikanische Bank which was established in 1905, Bank of Berlin which have three branches include Branch in Dar es salaam 1905. Also there  Handlesbank for ostafrika which have Branch at Tanga 1911- sisal[2].

      After WWI in 1918 the British took our the control of country from the Germans, in that time there were three commercial banks  were established in order to replace the German banks. These banks are:- The National and Grindlays Bank which Have 3 Branches in Tanganyika, Standard Bank Branches and  Borday Bank which have 8 Branches. So by 1958 there were 3 big commercial banks which sum of total branches includes 16.

1.2.5.2 INDEPENDENCE

By the time of independence, in 1961, the country banking industry was comprised of Standard Bank of south Africa, Material and Grind lays Bank, Barclays, Ottoman Bank, Bank of India, Bank of Baroda, Commercial Bank of Africa and  The National Bank of Pakistan. On  the day of independence there were specialized Non- Bank financial Institutions ( NBFl)  which were presented on the day of independence included; The post office sawing Bank, Land Bank, Local Development  loan  Foundation  and Few Housing and loan association catering mainly for Asians and white settlers.

                    The Tanzania Bank of commence  (T.B.C ) was established in 1965 and the Government of Zanzibar established  in 1965 and the Government of Zanzibar established The people  Bank in 1966 to act  as a government banker as well as a financing to state owned companies in Zanzibar .There were also other specialized financial institutions  included in finance  intermediate .There were the  institution like Agriculture credit Agency which was  established in 1962 and later connected to National Development and cooperation Bank in 1964.

1.2.5.3 POST ARUSHA DECLARATION

Following the Arusha Declaration all private banks were nationalized, their assets and liabilities were merged resulting into establishment of one big. The aim and measures of the Arusha Declaration were initial  successfully with only few frustration, later however a series of events and process of both a local and global social economic nature took place. These events and process include crisis of 1973/4 and the war with  Amin’s Uganda.Due to the events and process as 1973/4 became accident that a negative economic trend had set in  and unfortunately continued to gain momentum with  Tanzania balance of payments becoming unfavorable year after year with negative  balance of payments  with no  credit with the negative economic trend  was irreversible and indeed worsening. This worsening economic trend had a negative  impact on the standard of living of people , much of the  negative economic trend was ascribe to the policy of socialism and  self reliance[3].

               This policy therefore increasing came under fire commercial bank namely the  National Bank commerce  (NBC) which was wholly owned by the government in Tanzania main land. While  in Zanzibar  there was the peoples is Bank of Zanzibar and Tanzania investment  Bank ( T I B) was established in 1970 to produce development  finance to the country product sectors especially large scale industry. In addition to these commercial banks Tanzania established financial institution aimed at raising the standard of living of people. There were the:- Tanzania investment Bank  (by Act No 34 of 1972),The Tanzania Housing Bank ( by Act No 34 of 1972,and The Tanzania Rural Development Bank ( T R D B) by Act No 7 of 1971 by Act No 10 of !984 TRDB changed its name to cooperative and rural Development Bank And  by Act No 14 of 1985 CRDB was empowered to do commercial banking.

1.2.5.4 1990s

In the 1989 the Government adapted the National Investment policy aimed to faster economic and social development of the people of Tanzania by banking a more  nationally integrated economy. This policy statement was operationalzed by enactment of the National Investment Act 1990 No 10 of 1990, this Act was repealed and replaced by the Tanzania Investment Act 1997 No.26 of 1990 .  After passing the National investment Act 1990 there was free need to put in place an acceptable legal framework the exercise already began presidential  commission of culminated into the  monetary and  Banking system . The recommendation of the Banking ordinance 1960),  foreign exchange Act 1992 which  replaced the exchange control ordinance cap 294) and  Bank of Zanzibar Act ,1995 repeal and the replaced the Bank of Tanzania Act 1965 So 1995 was the turning point financial sector reforms in Tanzania.

1.3 LEGISLATIONS GOVERNING BANKING LAW IN TANZANIA

  1. The Bank and Financial Institutions Act, Act No.5 of 2006
  2. The Bank of Tanzania Act, Act No.4 of 2006
  3. The National Payment System Act, Act No.4 of 2015
  4. The Foreign Exchange Act [Cap 271 R.E 2002]
  5. The Microfinance Act, Act No.10 of 2018
  6. The Banking and Financial Institutions (Corporate Governance) Regulations, 2021
  7. The Banking and Financial Institutions (Development Finance) Regulations, 2021
  8. The Microfinance Savings and Credit Cooperative Societies Regulations 2019
  9. The Microfinance Community Microfinance Groups Regulations 2019
  10. he Foreign Exchange (Listed Securities) Regulations G.N. No. 227 of 2003
  11. The Foreign Exchange (Bureau De Change) Regulations, (GN 450 of 2019)
  12. The Banking and Financial Institutions (Prompt Correctve Actions) Regulations, 2014
  13. The Banking and Financial Institutions (Mortgage Finance) Regulations, 2015
  14. The Banking and Financial Institutions (Mortgage Finance) Regulations, 2011
  15. The Banking and Financial Institutions (Microfinance Activities) (Amendment) Regulations, 2015
  16. The Banking and Financial Institutions (Internal Control and Internal Audit) Regulations, 2014
  17. The Banking and Financial Institutions (Financial Leasing) Regulations, 2011
  18. The Banking and Financial Institutions (Disclosures) Regulations, 2014
  19. The Banking and Financial Institutions (Credit Reference Databank) Regulations, 2012
  20. The Banking and Financial Institutions (Capital Adequacy) (Amendment) Regulations, 2015
  21. The Bank of Tanzania (Credit Reference Bureau) Regulations, 2012
  22. The Anti Money Laundering (Electronic Funds Transfer and Cash Transactions Reporting) Regulations 2019
  23. The Anti Money Laundering (Amendment) Regulations, 2019
  24. The Ant-Money Laundering Regulations, 2012
  25. Bank of Tanzania (Financial Consumer Protection) Regulations, 2019
  26. TISS RULES AND REGULATIONS
  27. TACH RULES
  28. THE PAYMENT SYSTEMS LICENSING AND APPROVAL REGULATIONS, 2015
  29. THE ELECTRONIC MONEY REGULATIONS, 2015
  30. Banking and Financial Institutions (Internal Control and Internal Audit) Regulations, 2014
  31. Banking and Financial Institutions (Mortgage Finance) Regulations, 2011
  32. Banking and Financial Institutions (Mortgage Finance) Regulations, 2015
  33.  Banking and Financial Institutions (Tanzania Mortgage Refinance Company) Regulations, 2011
  34.  Bureau Regulations Amendment 2017
  35. The Banking and Financial Institutions (Capital Adequacy) Regulations, 2014
  36. The Banking and Financial Institutions (Consolidated Supervision) Regulations, 2014
  37. The Banking and Financial Institutions (Credit Concentration and Other Exposures Limits) Regulations, 2014
  38. The Banking and Financial Institutions (External Auditors) Regulations, 2014
  39. The Banking and Financial Institutions (Foreign Exchange Exposure Limits) Regulations, 2014
  40. The Banking and Financial Institutions (Licensing) Regulations, 2014
  41. The Banking and Financial Institutions (Liquidity Management) Regulations, 2014
  42. The Banking and Financial Institutions (Management of Risk Assets) Regulations, 2014
  43. The Banking and Financial Institutions (Microfinance Activities) Regulations, 2014
  44. The Banking and Financial Institutions (Physical Security Measures) Regulations, 2014
  45. The Banking and Financial Institutions (Prompt Corrective Actions) Regulations, 2014
  46. The Foreign Exchange (Bureau de Change) Regulations, 2008
  47. The Microfinance Non Deposit Taking Microfinance Service Providers Regulations 2019