Regulatory Alerts2023-01-01
Guidance Note on Computation of Capital Charge for Credit Risk for Banks and Financial Institutions, 2023
The Bank of Tanzania issued this 2023 guidance note to establish minimum capital requirements for credit risk under the Basel III Standardised Approach. Banks and financial institutions must calculate risk-weighted assets by applying prescribed risk weights to on- and off-balance sheet exposures, utilizing either external ratings from approved agencies or the Standardised Credit Risk Assessment Approach for unrated counterparties. The framework mandates rigorous counterparty due diligence, defines specific risk weights across diverse exposure categories including real estate and defaulted loans, and permits credit risk mitigation through eligible collateral instruments.
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