Only 137 microfinance companies are fit to operate in Ghana - BOG announces

The Bank of Ghana (BoG) has announced through a press statement that only 137 microfinance companies will operate in the country after revoking the licences of some 192 insolvent microfinance companies.

The BoG also revoked licences of another 155 insolvent microfinance companies that have ceased operations.

In a press release Friday, BoG explained that actions were taken pursuant to section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

The Central Bank in its statement said: "Following the revocation of the licences of these institutions, a total number of 137 microfinance companies will continue to operate. Going forward, the Bank of Ghana has put in place measures to ensure that the existing institutions remain safe and sound by complying with relevant prudential norms.’’

As part of efforts to manage the situation, the BoG says it will be "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 and Increase the resources available for effective supervision of licensed microfinance companies.

The bank also stated that: "The Bank of Ghana assures the public of its continued commitment to protecting depositors’ funds and promoting the stability of the financial system.’’

Meanwhile, the BoG says it has "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.’’

According to the regulator, "to salvage depositors’ funds, the Government of Ghana has made funds available to enable the Receiver pay depositors, after their claims are validated. 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.’’