Kwame Pianim, a prominent economist, has condemned the revocation of licenses of some banks and fund management companies.
According to him, the move by the Central Bank and the Securities and Exchange Commission in cleaning up the banking sector should have been the last option.
Mr. Pianim also revealed that the financial sector lacked regulatory coordination and jurisdiction.
“I think that what happened in the past was due partly to lack of jurisdiction. With some of the ponzi schemes; it was not clear whether the Bank of Ghana or the Securities Exchange Commission was to regulate them.
“Revoking a license is not the right [thing] to do to these companies. The idea is to be there; guide them when they are going wrong and let them know that you’re monitoring their accounts. So, if they’re not paying their bills, you are going to deal with them”.
Payment to customers of Black Shield Capital
On his part, Paul Ababio, the Deputy Director General of the Securities and Exchange also provided details on payments yet to be made to customers of Black Shield Capital.
According to him, the Commission is currently in court over liquidation of the assets of Black Shield Capital (Gold Coast). As such, what is currently on the table is partial bailout to these clients.
“Gold Coast is still in court with us so we haven’t got a liquidation order for them. So, on that side, it’s a partial bailout. But once we secure the liquidation order or know the outcome, we’ll know the way forward.
“What is happening now is that those we have liquidated are those we bring into the full bailout. So, those who do not have will be in the partial bailout until it is completed”.
Revocation of licenses in financial sector clean-up
The banking sector clean-up in August 2017 led to the collapse of nine universal banks, 347 microfinance companies and 39 microcredit companies.
This includes 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions.
The Securities and Exchange Commission also announced the revocation of licenses of 53 Fund Management Companies.
The total estimated cost of the state’s fiscal intervention, excluding interest payments, from 2017 to 2019 was pegged at GHS16.4 billion.
The collapse of the institutions has left clients in distress as many of the customers have been struggling to retrieve their savings and investments.
Finance Minister, Ken Ofori Atta on January 18, 2020 revealed that the cost of Ghana’s banking sector clean-up risks escalating to 20 billion cedis. This was as a result of government’s resolve to increasing the guaranteed payback for some depositors.
On August 25, 2020, the Vice President, Dr. Mahamudu Bawumia averred that over four million depositors would have lost their funds had the banking sector clean-up not been undertaken.
According to him, the previous administration’s poor management of the economy put the country’s financial sector on the verge of collapse. However, through the intervention of the current government, the monies of depositors were saved.