The Legal Quagmires Facing Lending and Securitization Transactions by Financial Institutions in Tanzania

Financial institutions play a major role in the general status of any country’s economy because they are financial intercessors whose principal purpose is to assist the management of financial assets vis-à-vis the people’s business concerns and financial needs. In Tanzania, commercial banks stand out as the most dominant of financial institutions with the issuing of loans been the most essential service offered. The challenges found in the lending and securitization dealings often babble up at the loan recovery stage due to faulty pre-contractual loan and mortgage processes between financial institutions and their potential borrowers, a main cause for potential bad loans and non-performing loans stemming out early on and way before loan recovery procedures set in; leading to the tedious legal disputes between the parties to the contracts in related civil and commercial cases. Despite the suitable banking and financial laws and regulations set on lending businesses, there is still a need to fine-tune the regulatory control on pre-contractual lending procedures through examining the factors resulting to ineffectual pre-contractual loan processes and the common subjects of disputes in court cases, so that a better grip on efficient lending and securitization procedures by financial institutions will be accomplished.