Financial institutions are organizations which deal with financial services, advice, assistance or support to individuals, companies and the public at large. They are established by the public and registered by the authorities. Financial institutions may be private or the publically owned. The types of financial institutions found in Tanzania are banks, insurance companies, and social security institutions. Others are loan-giving institutions and, savings and credit cooperative societies (SACCOS). The main roles of Financial Institutions in Economic Development are:-
1.Banks; A bank is an organization that provides financial services like storing and lending money to people or institutions. In Tanzania, there are two main types of banks, namely Central Bank and Commercial Banks.
2.Central bank; The Central Bank of Tanzania (BoT) was established following the decision to dissolve the East African Currency Board (EACB) and the establishment of separate central banks in Tanzania, Kenya, and Uganda. In December 1965, the National Assembly passed the bill of the establishment of the Bank of Tanzania. The Bank was opened by the first President of Tanzania, the Late Mwalimu Julius K. Nyerere, on 14th June, 1966.
3.The central bank is a national financial heart. The bank is independent from direct government influence when carrying out desirable monetary policies aimed at stimulating economic activities in the economy. The Central Bank of Tanzania carries out its responsibilities in close cooperation with the government, and in particular the Treasury which is primarily concerned with the financial policies of the government. The head is BoT is the Governor, who is appointed by the Presidents of the United Republic of Tanzania.