Business News of 2014-01-21

Undercapitalised NBFIs risk losing licence

The Deputy Governor of the Bank of Ghana (BoG), MillisonNarh, has urged shareholders of undercapitalised financial institutions to beef-up their capital levels to the regulatory minimum -- else they risk losing their operating licence.
The BoG in December 2009 and July 2010 issued three notices to non-bank financial institutions (NBFIs), directing them to increase their minimum paid-up capital to GH¢7million by December 2012.
According to Mr. Narh, as at the end of December 2013 some institutions had still not met the minimum capital requirement.
Mr. Narh, who was speaking at the launch of Best Point Saving and Loans Company in Accra, said the maintenance of reasonable economic capital places a financial institution in a better position to assume more risk without having a significant impact on its capital base.
“The size of loans that can be granted by an institution is limited by the size of its capital. And with the improvement in the economy, growing an institution’s capital will position it to undertake effective intermediation.”
For this reason, he said the BoG has recently increased the paid-up capital of saving and loans companies to GH¢15million, and any entrant must meet the amount while existing institutions are required to assess their requirements in relation to their risk profile and move toward complying with the new regulatory minimum.
Talking about the performance of NBFIs, he said the institutions have seen major improvements in their balance sheets over the past year. Total assets increased by 67.29 percent between August 2012 and August 2013, while total credit within the same period also increased by 62.67 percent. Paid-up capital also grew by 90.54 percent from GH¢252.21million to GH¢480.56million.
Best Point Saving and Loans
Best Point Savings and Loans Company (BPSL), a wholly-owned Ghanaian company, was incorporated in September 2012.
The company is owned by Mr. Osei Kwame and Mr. Ernest Ofori Sarpong with 50 percent holdings each.
The board chairman of BPSL, Mr. Ernest Ofori Sarpong, said the vision of the company is to be the most cost-effective and efficient savings and loans company providing cutting-edge financial solutions to small and medium enterprises and households.
He said it will deliver unique financial solutions that optimise customer satisfaction and shareholder value through the use of state-of-the-art technology and well-motivated professional staff.
He said it has been the dream of Mr. Osei Kwame and himself to set up a financial institution with a difference -- a difference in standard and in innovative products.
Mr. Narh commended management of the company, saying it is not uncommon to see new companies such as BPSL having the determination and zeal to achieve their corporate objectives in their formative years.
He said much as the company has the potential to realise its corporate objectives, it is imperative that serious attention be given to good corporate governance, internal control and risk management.
He said adequate internal control measures, which are in consonance with the scale and nature of the operations of the company, must be adhered to at all times -- adding that such internal control must take into account clear arrangements for delegating authority and responsibility and clear reporting lines.