Use NBFIs to grow economy - FCP Boss

Non-bank Financing Institutions (NBFIs) can become a “feed” to the country’s universal banks if well-supervised and aided to grow, Mr. John Kofi Mensah, the Chief Executive Officer (CEO) of First Capital Plus Bank Limited has said.

“What we are witnessing today is enough evidence that given adequate supervision the NBFIs can become a feed to Ghana’s banking industry. Indeed, the NBFIs form an integral part of agents in monetary policy formulation and economic growth.

“Indeed the NBFIs, especially microfinance institutions with a niche for small business inclusive of family and household ventures, are potential ambassadors of poverty alleviation,” he said.

He was speaking at an official ceremony to announce the elevation of First Capital Plus Savings and Loans Limited into a universal bank -- First Capital Plus Bank Limited -- following the issuance of a universal banking licence by the Bank of Ghana (BOG) in November, 2013.

His comments follow recent concerns raised by some banks about the operations of some deposit-taking non-bank financial institutions (NBFIs) which promise colossal interest on deposits, thereby threatening the savings mobilisation drive of universal banks.

There are currently about 225 registered NBFIs and numerous others are awaiting their certification by the Bank of Ghana. The statutory paid-up capital for both deposit and non- deposit-taking NBFIs is currently GH¢7million, and GH¢120million for universal banks.

Mr. Mensah said that a well-regulated NBFI regime is critical.“It is possible that a significant number of businessmen with only profit motives might have entered the micro finance sector. Hence, while stressing the positive impacts it is also true that if not properly regulated they can also become an albatross on the banking industry, as best practices may be relegated to the background.”

He noted that banking industry has grown steadily, and strong supervisory oversight by the BoG has made the industry very attractive on the continent.

“As far as the African continent is concerned, we have the best supervisory body (BoG). If you look at the interest being shown in the banking industry by foreign countries -- not only in the sub-region but also in Europe and America -- it means that there is something good that they have seen.”

First Capital Plus Bank Limited has an asset size of about GH¢287 million. Its deposit base stood at GH¢211.11million as at December 2012.

Recent figures from the Central Bank indicate that it commands 16 percent of the advances of savings and loans companies and 19 percent of the sector total assets.

“As a bank, the small- and medium-scale (SME) sector will continue to be our core target segment. What the universal banking status offers us is the opportunity to offer more tailor-made products to the growing needs of the SME market, with solutions we were hitherto legally constrained from directly providing.

“One of our hallmarks has been innovation, and we were the first financial institution to introduce an SMS-based deposit solution dubbed Speedbanking. This makes it possible for customers to deposit cash into their bank accounts any time, any day and anywhere through their mobile phones without having to visit the banking hall. We will continue to innovate and develop more relevant customer-focused solutions for our target market.”