The Bank of Ghana (BoG) in a statement, has served notice to banks and specialised deposit-taking institution (SDIs) to abolish unfair fees, charges and other practices.

According to the statement issued on June 18, 2021, the unfair charges are inappropriate and does not protect the interest of customers. It also noted that those fees are not in accordance to the institution’s laws.

“These practices are deemed to be unfair, inappropriate and detrimental to the financial inclusion agenda and the protection of customers’ interest. In line with the mandate of the Bank of Ghana to deal with unlawful or improper practices of banks and SDIs under Section 3 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) and to ensure that the interest of customers of banks and SDIs are adequately protected”

Moreover, as part of the directive, the Bank of Ghana has listed seven practices that need to be abolished.

The first on the list is the Credit Insurance Premium Overcharges. The BoG noted that, as part of credit underwriting policies, a number of banks and SDIs require borrowers to hold credit insurance against eventualities such as death, permanent disability and termination of employment.

It further stated that, it acknowledges the importance of this practice as a loss mitigating norm in credit management. However, it has observed that a number of banks and SDIs take advantage to overprice the premiums charged to customers, resulting in the increased cost of borrowing. It has therefore warned the banks and SDIs to stop such practices. “Banks and SDIs are directed to desist from premium overcharges and to adhere strictly to.”

Furthermore, another practice cited by BoG is maintenance fees on savings account popularly known as “Account Maintenance Fees”. The Central Bank stated that the practice of charging on savings accounts discourages depositors who expects to earn interest from saving in banks.

“The application of such fees has driven a number of savings accounts into debit and in so doing, eroded the deposits of vulnerable depositors who would generally expect their savings accounts to earn interest. This practice is detrimental to financial inclusion and negates the gains of the financial literacy programmes geared towards promoting personal savings”.

Moreover, BoG directed all Banks and SDIs to desist from levying penalties on customers who withdraw own funds below certain thresholds from the banking halls. In addition, it directed the banks and SDIs not levy penalties against customers who request account balances within banking halls.

More so, the BoG has directed all Banks and SDIs to stop charging application of interest on Penal Charges where penal interest rates levied against defaulting loan customers, are made to accrue interest. It noted that the practice results in high outstanding loan balances which customers are unable to pay, resulting in high non-performing loans. However, BoG said the practice is detrimental to the credit market.

In addition, the other charges the Bank of Ghana wants to be abolished is the quotation of monthly interest rates on credit facilities and third party deposit/withdrawal violations.

In conclusion, the Central Bank directs all Banks and SDIs to desist from these practices as they negatively affect the financial inclusion drive of the Bank of Ghana.