Bank of Tanzania

Clearing and Settlement Systems.

The Bank of Tanzania plays a role of Clearing and Settlement Agent between various payment systems providers such as banks and card payment providers. The Settlement here refers to the actual exchange of money, or some other value, for the securities. Clearing is the process of updating the accounts of the trading parties and arranging for the transfer of money and securities. Currently, the Bank facilitates settlements for local transactions through the Tanzania Interbank Settlement System (TISS) for High value or Time sensitive payments. On the other hand, the Bank facilitates local transactions for cheques and low value (retail) electronic payments thoughTanzania Automated Clearing House (TACH). The Bank also facilitates cross border payments for EAC member countries through the East Africa Payment System (EAPS). On the other hand, the Bank Oversees the cross border payments for SADC member states through a system called SADC RTGS.

The Bank also facilitates cross border payments for EAC member countries through the East Africa Payment System (EAPS). On the other hand, the Bank Oversees the cross border payments for SADC member states through a system called SADC RTGS.

Tanzania Automated Clearing House (TACH)

This is a centralized automated system operated by the Bank of Tanzania that offer clearing for cheques and electronic funds transfer (EFT). TACH uses cheque images for clearing. The clearing runs in two currencies TZS and USD for cheques and TZS for electronic funds transfer (EFT). TACH went live in April 2015. Prior to TACH, there were 5 clearing houses located in BOT branches of Mwanza, Mbeya, Arusha, Zanzibar and Dar es Salaam. With TACH there is a reduction of clearing days as well as increasing the speed of the provision of funds to customers.

Uses SWIFT ISO 20022 messaging format standards for cheque clearing using imaging technology and Electronic fund transfer (low value) messages between banks
Clearing of interbank Tanzanian Shillings and United States Dollar cheques
Clearing of Interbank Electronic Funds Transfer (EFTs) high volume low value interbank payments such as customer payments, salaries and recurrent expenses
enables the exchange of low value instruments among participating banks in a safe and efficient manner
Improved efficiency in processing of cheques by reducing the clearing period from previous T+3 up to 7 days to T+1 cheque clearing period countrywide

Using TACH, the Bank provides: -

Operator role of the Clearing
Technical and user support
Settlement mechanism
Oversee the settlement and clearing systems

Tanzania Interbank Settlement System (TISS)

Real Time Gross Settlement (RTGS) system, which uses SWIFT MT, messages standards to facilitate settlement of interbank payments and time sensitive payments.

TISS facilitates: Payments between banks, government payments through an interface with Ministry of Finance and Planning, collection of Government revenue(TRA receipts), settlement of financial market transactions (Government securities), settlement obligations from Tanzania Automated Clearing House (TACH), stock exchange (DSE) obligations, and card obligations arising payments switches like Umoja Switch, Visa and Mastercard transactions. TISS encompasses EAPS module, which facilitates cross border inter-bank payments within EAC member states.

Significantly improved efficiency by eliminating the settlement time lag (float) and minimized settlement risks

East Africa Payment System (EAPS)

This is a regional initiative by East African member states to put in place a mechanism that will facilitate cross border payments in real time. EAPS went live on 25th Nov. 2013. It is now being enhanced to facilitate EAC currency convertibility. EAPS is a secure, effective and efficient funds transfer system that enhances efficiency and safety of payments and settlement within the EAC region.

EAPS is currently operational between Kenya, Tanzania, Uganda and Rwanda successfully linking Kenya Electronic Payment and Settlement System (KEPSS), Tanzania Interbank Settlement System (TISS), Uganda National Interbank Settlement system (UNISS) and Rwanda Integrated Payment Processing System (RIPPS).

EAPS operations involve exchange of messages from selected commercial banks across the partner states using the local real time gross settlement systems (RTGS) of the central banks of participating country.

The system architecture is based on using the local RTGS systems of partner states and SWIFT network to ensure security of cross border payments. The system enables usage of local currencies for settlement of payments in the region.

SADC RTGS

The SADC RTGS is a cross-border electronic payments system serving the Southern African Development Community's (SADC) member states on a gross and real time basis. SADC RTGS is meant to replace the paper-based instruments such as bank drafts and cheques and facilitate electronic transfers within SADC Member States.

SADC RTGS is hosted and operated by the South African Reserve Bank (SARB) and all participants including all central banks have accounts in SADC RTGS as ordinary members. The participants in SADC RTGS must source the Rands as a trading currency. For Commercial Banks the use of SADC RTGS for cross-border payments is optional.

SADC RTGS is;

Real time gross settlement system
The system facilitate cross border payments within SADC Partner states
Maintains interfaces with participating clearing and settlement Financial Institutions (comm. banks) in each jurisdiction to facilitate funds transfer. Each member CB has authority to oversee implementation and operation of SADC RTGS
Settlement currency is south African Rand
In Tanzania, 6 banks are currently participating in SADC RTGS