The Bank of Ghana (BoG) announced steps here on Friday to crack down on fake and deviant microfinance and other non-bank financial institutions.
While the microfinance and other non-bank financial institutions are helping to deepen financial intermediation in Ghana.
Raymond Amanfu, Head of Other Financial Institutions Supervision Department of the BoG, said the proliferation of unlicensed ones had taken a worrying trend.
“Such institutions are promising unsustainable interest rates and other packages. Ladies and Gentlemen, rates as high as 30 percent to 50 percent every two months is not sustainable. Such institutions collapse in no time,” Amanfu stated.
Total assets of the micro-finance sector as of June 2015 were more than 400 million dollars representing 1.7 percent of the total assets of the banking industry.
Of these, loans and advances accounted for 45.5 percent while 7.7 percent was invested in government securities.
Amanfu said when illegal institutions collapsed, the impression was created that the central bank had placed moratorium on their operations or that the Financial Intelligence Centre (FIC) was keeping their funds, making customers to besiege the regulatory institutions for refund.
There are 518 licensed microfinance institutions in Ghana and the central bank has raised the minimum paid up capital for these institutions from 125,000 U.S Dollars and 75,000 dollars to 500,000 dollars.
To ensure that microfinance operations are done according to the law, Amanfu said the Bank of Ghana would cooperate with the security services to arrest any institution operating illegally.
“We will use collaboration between Bank of Ghana, Financial Intelligence Center and security agencies to track down, arrest and prosecute directors, shareholders and management of unlicensed institutions,” he added. Enditem