A lot of Ghanaian businesses and individuals borrow from financial institutions with absolutely no intention to repay.
These entities are well aware that they will not be in a position to repay loans acquired but nonetheless go ahead to take advantage of the sidelining of due process by the banks in giving out loans, to enrich themselves.
An economist at the University of Ghana Business School, Prof Godfred Bopkin who made the observation in a discussion on the collapse of UT Bank and Capital Banks on JoyFM, believes the phenomenon contributed significantly to the demise of the banks.
The Bank of Ghana on Monday announced the takeover of Capital Bank and UT bank by GCB Bank Ltd due to severe impairment of their capital.
The main offices and branches of UT Bank and Capital Bank will be under the control of GCB bank and will be opened at 1pm today (Monday) for normal business transactions and a remedy to the possible departure of affected banks clients.
The Economist said many financial institutions are reeling under bad debt as a result of the attitude of these businesses and individuals. Coupled with a weak credit recovery department it has become practically impossible to recover the loans involved.
Prof Bopkin wants the streamlining of lending processes and thorough background checks by the banks and other financial institutions to ensure persons or business they lend to, are in a position to profitably invest and pay back within the stipulated time.
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