It is prohibited to engage in financial leasing operation without having a license issued by the Bank of Tanzania. A person is said to engage in financial leasing operation if is involving in provision of financial leasing. Financial Leasing refer to a lease or leasing agreement entered into pursuant to a transaction in which

1. The lessee specifies the property and selects the supplier;

2. The lessor acquires the selected property through lease or purchase as instructed in writing by the lessee without assuming any direct responsibility of maintenance and after-service

3. The lease payments are calculated so as to take into account the amortization of the whole or a substantial part of the cost of the property and

4. Matters concerning the disposal of the leased property after the expiry of the lease, including an option given to the lessee to purchase the leases property, are agreed upon between the parties;

Who can apply for Financial Leasing license.

Bank and Financial Institution licensed by the Bank of Tanzania

Any financial Leasing company incorporated as limited liability company under the laws of Tanzania.

Capital Requirements

The minimal capital requirement for financial leasing company to commence its operations is One Billion Tanzania Shillings or such amount as the Bank may prescribe. In case this capital is remitted in foreign currency, it shall be reflected in the books in Tanzania Shillings using exchange rate prevailing on the date of remittance. The financial leasing company is required to maintain the minimal capital at all times. In case fail to maintain its capital, the Bank may suspend it from carrying out financial leasing operations.

Requirement to deposit Capital in Tanzanian Registered bank

A financial leasing company is required to deposit its paid up capital and other funds either in Tanzania Shillings or in foreign currency, in Tanzanian registered bank or financial institution or Treasury Bills and other Government securities of not more than 364 days. In case fail to adhere to this mandatory requirement, the Bank may suspend it from carrying out financial leasing operations.

Application for Financial Leasing license

An application for Financial Leasing license is made to the Bank of Tanzania in a prescribed form and must be accompanied by the followings: -

1. A copy of the Memorandum and articles of association registered by the Registrar of Companies;

2. Authenticated legal documents or board resolution authorizing the signatory

3. Description of accounting system and information and communication technology in use or to be used in the operations of the financial leasing company and proposed future investment

4. Number of employees, job descriptions of senior management positions and an organization chart

5. Description of internal control procedures

6. Narrative description of shareholders, board members and senior management and strategy for the successful operation of the financial leasing company

7. Application fee- banker’s cheque of five million Tanzania Shillings or any other amount as may be determined by the Bank from time to time payable to the Bank as non-refundable application fee.

8. Business Plan and Financial Projections

9. Financial Leasing Operation Policies

10. Copies of documents indicated in 4th schedule to the regulations

11. Details of principal contact persons

Time Limit for Granting License

The license shall be granted by the Bank within 60 days after receipt of a complete application or where further information has been required, after receipt of such information.

Rejection of the Application

The Bank may reject the application in writing by giving out to the applicant an explanation of the ground upon which the rejection is based. The applicant may re-apply if deficiencies that formed the basis for the rejection of the initial application or subsequent review have been corrected or otherwise addressed.

Commencement of Business

A financial leasing company is required to commence its operations within 12 months from the date the license was granted unless such period is extended in writing by the Bank. The business premises, security facilities, communication facilities, processing equipment, accounting and internal control systems of a licensed financial leasing company must be inspected or reviewed by the Bank before e commencement of business.

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