These companies, according to the BoG, are insolvent and had folded up.
Bank of Ghana revokes licences of 347 microfinance companies, 137 now licenced to operate
The Bank of Ghana (BoG) has revoked the licences of some 347 microfinance companies in the country.
The Governor of the Bank of Ghana (BoG), Dr Ernest Addison
In a statement issued on Friday, 31 May 2019, the central bank said it has, “with effect from today, revoked the licences of 192 insolvent microfinance companies”. The “licences of another 155 insolvent microfinance companies that have ceased operations have been revoked”.
These 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 or is likely to become insolvent within the next 60 days.
“The revocation of the licences of these institutions is to get rid of insolvent and dormant institutions that have no reasonable prospects of rehabilitation and have denied depositors access to their deposits, thereby constituting a threat to the stability of the financial system”, the statement said.
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The BoG has however noted that “To salvage depositors’ funds, the government of Ghana has made funds available to enable the Receiver pay depositors, after their claims are validated”, adding that, “In line with the hierarchy of creditor claims set out under Act 930, other creditors of the failed institutions will be settled by the Receiver upon validation of their claims and to the extent that the Receiver is able to realise value from the remaining assets of these institutions”.
Consequently, the Bank of Ghana has appointed Mr Eric Nipah as Receiver for the specified institutions in line with section 123 (2) of Act 930.
Meanwhile, the BoG said a total number of 137 microfinance companies will continue to operate.
Way forward
The Bank of Ghana has again put in place measures to ensure that the existing institutions remain safe and sound by complying with relevant prudential norms.
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Among other things, the Bank of Ghana is:
• Undertaking a comprehensive review of licensing and supervisory policies and directives;
• Reviewing the minimum capital requirements for microfinance companies and encouraging possible consolidation through voluntary mergers and acquisitions;
• Introducing proportional corporate governance, fit and proper, and risk management directives;
• Embarking on strict supervision of licensed institutions and enforcement of relevant regulatory requirements;
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• Increase the resources available for effective supervision of licensed microfinance companies.
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