Ghana Association of Microfinance Companies (GAMC) has urged Bank of Ghana (BoG) to implement its decision of closing down Microfinance Institutions (MFI) operating illegally in the country.
BoG last week started chasing directors of some 10 microfinance companies who operate illegally in the Brong Ahafo, Western, Northern, Upper East and Upper West regions and consequently moving to shutdown the companies for breach of financial regulations.
The 10 blacklisted microfinance institutions are Care For Humanity International, Buoyant Investment Limited; God is Love Fun Club, Perfect Business Fun Club, Perfect Edge Group, L.P.M Eye Adom Fun Club, Creative Fun Club, Little Drops Helping Hand Association, Financial Giants Fun Club and Great Winners Fun Club.
??the central bank is collaborating with the Financial Intelligence Centre and Security Agencies to track down, arrest and prosecute directors, shareholders and management of unlicensed institutions, and may also include media houses that advertise these illegal institutions for abetment of crime?, Graphic Business reported on 1st September.
?Their illegal activities spread into the whole financial system in the country and make things very rough for us?, Ekow Orleans Boham, Vice Chairman of GAMC told New Crusading GUIDE yesterday in an interview, adding it was necessary for BoG to step in and make things smooth for licensed ones.
He recalled that since 2011, BoG has opened up opportunities for MFI?s to subject themselves to regulations by attaining operating license.
However, he could not understand why a firm would ignore the law and operate illegally.
The vice chairman noted that the existence of MFI has helped the 70% un-banked population to save money and also access short term loan supports, hence worried that the illegalities could destroy those benefits.
Ekow Boham described as abnormal and unsustainable, the propagation of unlicensed institutions which promise rates between 30 to 55 per cent every two months, sending a strong signal to the public to be cautious of the MFI they deal with.
He therefore counseled the general public to check online, Bank of Ghana, District Assemblies and even the police for accredited firms in order not to fall prey to the ?criminalities? of unlicensed firms.
Mr. Boham explained that because BoG has all details of registered MFIs, it was easy to fish any of them out, should they default in their service delivery.
Currently, there are 518 microfinance institutions with a total assets of GH?1.3 billion as at June this year accounting for about 1.7 per cent of the total assets of the banking industry.
Loans and advances accounted for 45.5 per cent or GH?587 million, which is deployed to various sectors of the economy, while 7.7 per cent or GH?99.3 million is invested in government securities.
MFIs as at June had mobilized GH?946.9 million in deposits, which formed 73.4 per cent of total assets of the MFIs industry.
By : Paa Kwesi Agyefi
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