The Bank of Tanzania (BoT) has issued draft Regulatory Reporting Guidelines for Non-Interest Banking Business, marking another step toward strengthening the country's regulatory framework for Islamic finance as demand for Shari'ah-compliant banking products continues to grow.
The central bank has circulated the draft guidelines and reporting templates to all banks and financial institutions, inviting industry stakeholders to submit comments before the proposals are finalized.
According to the BoT, the guidelines are intended to establish a standardized framework for regulatory reporting by institutions offering non-interest banking services, enabling more effective supervision and improving the quality of data collected from the sector.
The move comes as Tanzania seeks to expand financial inclusion by accommodating customers who prefer banking services that comply with Islamic commercial principles.
While several commercial banks already operate Islamic banking windows, the absence of dedicated reporting standards has limited the regulator's ability to monitor the segment independently from conventional banking operations.
Under the draft framework, the guidelines will apply to all banks and financial institutions engaged in non-interest banking business, whether operating as fully-fledged Islamic financial institutions or through dedicated non-interest banking windows within conventional banks. The regulations are issued under the Banking and Financial Institutions Act.
The BoT says the primary objective is to ensure proper regulatory reporting while strengthening off-site supervision of institutions engaged in non-interest banking. The reporting framework is also expected to provide the central bank with comprehensive and accurate industry data to support supervisory oversight and monetary policy formulation.
The draft guidelines provide detailed definitions of Shari'ah-compliant financial products and financing arrangements that institutions may offer.
These include sale-based contracts such as Murabaha, Commodity Murabaha (Tawarruq), Salam and Istisna'a; profit-and-loss sharing arrangements including Mudarabah and Musharakah; lease-based financing such as Ijarah; as well as Sukuk, Takaful and benevolent loan products like Qard Hassan.
According to the draft, banks may also introduce additional Shari'ah-compliant financing products provided they are recommended by their respective Shari'ah Advisory Committees and approved by their boards.
The proposed framework places significant responsibility on bank boards and senior management to ensure compliance.
Boards will be required to oversee adherence to the reporting guidelines, ensure the accuracy of regulatory returns and approve financing modes recommended by Shari'ah Advisory Committees. Senior management will be responsible for establishing effective internal controls and procedures for preparing, reviewing and submitting regulatory reports to the central bank.
The draft further requires institutions engaged in non-interest banking to comply with guidance issued by the National Board of Accountants and Auditors (NBAA) relating to Islamic banking business, reinforcing consistency in financial reporting and accounting practices.
Under the proposed reporting regime, banks will be required to submit periodic reports to the Bank of Tanzania in formats and at frequencies prescribed by the regulator. Although the consultation document does not specify reporting intervals, it makes clear that institutions must provide standardized regulatory returns once the guidelines become operational.
The guidelines also outline enforcement measures for non-compliance. Depending on the severity of violations, the central bank may impose civil monetary penalties, suspend lending and investment operations, restrict access to central bank credit facilities, suspend the acceptance of new deposits, remove responsible directors or officers from office, disqualify them from serving in banking institutions or, in the most serious cases, revoke a banking licence.
Industry participants have been asked to review both the draft guidelines and accompanying reporting templates before submitting comments and recommendations to the central bank. The consultation process is expected to help refine the reporting framework before its formal adoption. Feedback is due by August 7, 2026.
The proposed framework represents an important milestone in the evolution of Tanzania's Islamic finance industry.
By establishing uniform reporting standards and strengthening regulatory oversight, the Bank of Tanzania aims to enhance transparency, improve risk monitoring and create a stronger foundation for the sustainable growth of non-interest banking in the country.