NDC should stop propaganda on financial sector clean-up – Political analyst

Political analyst Kofi Poku has called on the opposition National Democratic Congress to refrain from making negative commentaries on the financial sector clean-up exercise.

As part of efforts to strengthen the banking sector, the Bank of Ghana conducted a clean-up exercise in 2017 to ensure stability in the financial sector and strengthen the position of banks in the country as part of its mandate.

According to Poku, the opposition NDC should commend the government and the central bank for preventing a financial sector crisis instead of resorting to negative propaganda regarding the clean-up exercise.

"Most shareholders have admitted to misusing depositor funds to acquire assets in their names. Some have also agreed to return these properties to the receiver as depositors' funds were used to purchase them, which is against banking regulations," the political analyst said.

In response to the NDC's comments on the restoration of licenses for resolved banks, Poku noted that many local banks at the time had breached banking regulations, had governance issues, and diverted depositors' funds to benefit shareholders.

“The NDC fails to appreciate the corporate governance problems in the financial sector as poor governance and breaching prudential rules were at the core of the failed banks.

“The financial system was on the brink of collapse due to poor business practices and weak capital positions of banks and financial institutions. Some banks had liabilities exceeding their assets and were relying on liquidity support from the Bank of Ghana, putting depositors' funds at risk. The government intervened to protect customers' funds,” Poku stressed.

He also accused the NDC administration of contributing to the challenges in the financial sector that led to the clean-up exercise in 2017.

The banking sector clean-up exercise took place from mid-2017 to January 2020. The clean-up resulted in a reduction in the number of banks from 34 to 23, while 347 microfinance institutions, 15 savings and loans, and eight finance houses had their licenses revoked for various breaches, according to the Central Bank.

MA