Government's interference in DKM scam acceptable – World Bank Executive
The Global Lead for Credit Infrastructure at the World Bank, Mahesh Uttamchandani has described as acceptable, government’s intervention in the DKM microfinance scam to help customers get back their investments.
According to him, unlike corporate private entities, an insolvency involving financial institutions like DKM, have larger societal impact which have dire economic implications.
“A regime for insolvency for financial institutions has to involve the public protection component which is very different from a traditional corporate insolvency…typically one finds a financial institution in insolvency regime involves an element of conserved ownership by the government or an arm of government,” he stated.
Over 70,000 customers of DKM microfinance are awaiting payments of their locked up cash after the company suspended operations about a year ago. Government through the Registrar General’s department is expected to carry out the repayment exercise.
The Financial Sector Specialist also explains to Citi Business News international standards permit public protection from government’s due to the strategic importance of such cases.
“This is acceptable as opposed to a traditional corporate insolvency which in most countries is left to the private sector although even there, it is conducted in a strategically and important business as happened in the US when in the financial crisis,” he stated.
“Financial institutions have broader societal impact and they need to be treated on an entirely separate regime,” Mahesh Uttamchandani added.
Mahesh Uttamchandani who was speaking at a round table conference on promoting international insolvency regimes across Africa further implored on regulators to develop efficient regimes and foster economic growth.
“Comparing Ghana’s insolvency regime to international best practices, there is still more room for improvement as to working to promote growth and access to finance particularly for small businesses,” “One aspect of insolvency is to ensure that NPL’s result in an efficient and transparent manner and also promote growth and access to finance,” he observed.
The two day conference brought together both private and public policymakers regarding insolvency reform in Africa whilst encouraging the sharing of reform experiences.
This year’s edition on the theme, “Freedom to Fail? Insolvency for Micro, Small and Medium Enterprises”, is the seventh edition since its inception in 2010. It was organized under the auspices of Insol International and the World Bank Group in association with the Ghana Association of Restructuring and Insolvency Advisors (GARIA).