Don’t bite more than you can chew; a good call to SDIs

Specialised deposit-taking institutions comprising savings and loans companies, finance house, microfinance firms and rural and community banks (RCBs) play a noble role in the country’s financial setup.

But for them most people and businesses deemed too risky by the universal banks would have been cut from accessing funds to grow and expand their investments.

They are “friends” to the petty trader, hairdresser, farmer and all informal sector services providers and they accept small deposits and to provide small loans to micro, small and medium businesses et al.

The fact that a chunk of Ghanaian businesses remaininformal with SMEs taking up close 80percent of private sector jobs tell the enormity of SDIs contribution to national development.

It is therefore very disturbing to see some of them either fold up or closed down by the sector regulator due to what can best be described as overambition among several infraction.

SDIs are regulated under the Banks and Specialised Deposit-Taking Institutions Act of 2016 (Act 930) and licensed by the central bank to provide access to finance to segments of our society that would typically not be able to access financial services from commercial banks.

Unfortunately, without the requisite know-how, some of them stray from their core mandate of steering financial inclusion to compete in the universal banking space and end up losing their grounds in the process.

Poor capitalisation, poor business models, poor governance and risk management, and in some cases fraud and dishonesty, which was some sort of conventional practice to them, could not sustain these ambitious SDIs when they went off their mark.

We side with the BoG’s charge to these institutions to stay within their limit as channels for financial inclusion delivery which is their preserve and stronghold.