The Private Enterprise Federation has warned that confidence in the banking sector could deteriorate if depositors’ funds of defunct financial institutions are not paid back on time.
This is due to the fact that, some customers of the defunct savings and loans and micro finance companies are still struggling to secure their funds. The receiver, Eric Nana Nipa recently revealed that he plans to finalize payments of the remaining funds by the end of this month. Mr. Nipah has said that, about 96 percent of all validated depositor claims which stands at GHS 5.4 billion have been settled.
However, the Chief Executive Officer (CEO) of the Private Enterprise Federation, Nana Osei Bonsu has described the process of paying depositors as not good enough. According to him, the “time and priority” of the Receiver lives much to be desired.
“How and when do you get these monies back to the depositors so people don’t lose their confidence in the financial system? Because as we go, people, gradually are beginning to think, why should I put my money in a regulated institution when the regulator has gone to sleep. When the thieves are… roaming the town. So we have to look at the right of the depositors because we are eroding the confidence of people to put their monies in financial institutions in the future.
“If you were in their shoes would you do that tomorrow? If you use your hard earn money to run your business {and it} is entangled in this, your business is failing and now under COVID, you can’t even do any resurrection… and any activity, what do you do?”
The financial sector clean-up, which commenced under the Akufo-Addo administration in August 2017, led to the collapse of nine universal banks and some 347 microfinance companies on May 31, 2019.
In addition, the Bank of Ghana later in August 2019 revoked the licenses of 23 insolvent savings and loans companies and finance houses, while the Securities and Exchange Commission revoked the licenses of over 50 Fund Management Companies.
According to the BoG, this was in pursuant to Section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), which requires the Bank of Ghana to revoke the license of a Bank or Specialised Deposit-Taking Institution (SDI) where the Bank of Ghana determines that the institution is insolvent.
The Receiver for the defunct 347 Microfinance Companies and 23 Savings and Loans Companies and Finance Houses, earlier this month indicated that government is not only interested in recovering assets and paying depositors, but will also commence prosecutions from August this year.
Earlier this year, the Economic and Organized Crime Office (EOCO), froze some 31 accounts and some landed property of Nii Kotei Dzani, as part of efforts to among other things retrieve funds from him to settle customers whose funds are locked up with the defunct company.
Ideal Finance was among the 23 savings and loans and finance houses that lost their licenses after they were declared insolvent by the Bank of Ghana as part of the financial sector clean-up.
Also, according to him, with the help of EOCO assets worth about GHS 500 million have been recovered, adding that, the work towards the prosecution from August has been carried out in the last one year.
