NDC questions BoG's decision to collapse 23 savings & loans companies

The NDC has questioned the decision of the Bank of Ghana, BoG to revoke the licences of 23 savings and loans companies.

MP for Tamale North Constituency, Alhassan Suhuyini speaking on the collapse of some 23 savings and loans companies by the BoG said there should have been better ways to handle the insolvency of the financial institutions rather than collapsing them.

According to him, some of the companies have raised issues about the government's indebtedness to them and the funds could have helped the companies continue their businesses.

Sharing his thoughts, Alhassan Suhuyini  said, "This brings the question of the how, everybody knows the need for us to clean the banking sector but reforms are not synonymous to closure, some people turn to make the point to look as if there is a call for us to reform our banking sector then it meant that we needed to just close those banks so it raises the question of whether the how it is done is the best way we could have carried out this whole exercise and the cost at which it is done is also important that as we agree that there is a need to reform our financial institutions, the way we have gone about it and the cost as which we are doing.."

It is that really the most ideal way we could have approached this? I don't think it is, i believe that there are better ways that we could have done this especially with some of these issues that are raised by the owners and the fact that government is not denying most of these claims that they owe these institutions and making the point that if they pay the amount that they owe maybe those banks may not have collapsed, government is not speaking about that but rather highlighting how much it is costing us to but not how much to pay these institutions to allow them to continue to work.."       

Licence revocation

The Bank of Ghana, BoG on Friday, August 16 revoked the licences of twenty-three (23) insolvent savings and loans companies and finance house companies.

The central bank in a statement on Friday said the revocation of the licences of these institutions has become necessary because they are insolvent even after a reasonable period within which the Bank of Ghana had engaged with them in the hope that they would be recapitalized by their shareholders to return them to solvency.”

“It is the Bank of Ghana’s assessment that these institutions have no reasonable prospects of recovery, and that their continued existence poses severe risks to the stability of the financial system and to the interests of their depositors,” the statement added.

BoG in the statement explained that the actions “were taken pursuant to Section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), which requires the Bank of Ghana to revoke the licence of a Bank or Specialised Deposit-Taking Institution (SDI) where the Bank of Ghana determines that the institution is insolvent. The Bank of Ghana has also appointed Mr Eric Nipah as a Receiver for the specified institutions in line with section 123 (2) of Act 930.”

Assurance to customers

BoG has also assured that funds are available to pay customers of the 23 finance houses and savings and loans companies whose licences were revoked today.

The Central Bank says it has provided funds to ensure that the Receiver of the financial entities, whose licences have been revoked, will pay the affected customers.

“The Government has made available funds to enable the Receiver to pay depositors of the savings and loans companies and finance houses after validation of their claims. Other creditors of the failed institutions will be settled by the Receiver in line with the hierarchy or priority of creditors’ claims set out under Act 930,” the Bank of Ghana said in a statement.

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