Regulatory Alerts2023-01-01
Guidance Note on Computation of Capital Charge for Market Risk for Banks and Financial Institutions, 2023
The Bank of Tanzania issued this guidance to mandate a Simplified Standardised Approach for computing market risk capital charges, requiring banks and financial institutions to classify instruments into trading or banking books based on holding purposes and fair value criteria. The framework specifies capital requirements for interest rate, equity, and foreign exchange risks, applying designated scaling factors (1.30, 3.50, and 1.20 respectively) to general and specific risk components. Institutions must calculate the total capital charge by aggregating these recalibrated requirements, applying a 12 percent minimum capital adequacy multiplier to risk-weighted assets, and submitting periodic supervisory reports.
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