Depositors of insolvent microfinance companies may receive 100% per cent deposits-BoG


The Deputy Director in charge of Supervision and other Financial Services at the Bank of Ghana (BoG), Bernard Otabil, has given an assurance that depositors of the insolvent microfiance companies who had their licences revoked would be paid after the receiver is done with his

He told Kwabena Agyapong on Rainbow Radio 87.5Fm that the central bank is looking at a 100 pr cent payment of deposits to customers involved.

He indicated that the receiver from PricewaterHouse Coopers (PwC) has been given up to 60 days to complete his work.

The central bank on Friday revoked the licences of 386 insolvent microfinance and microcredit companies appointing Eric Nipah, as receiver.

He is to supervise the winding down the affairs of microfinance companies whose licences were revoked.

This includes 192 microfinance companies having their licenses revoked with another 155 insolvent companies that have ceased operations also suffering the same fate.

The central bank also revoked the licences of 29 insolvent microcredit companies.

The BoG explained that regarding the microfinance companies, it took the action pursuant to section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

He said the depositors will go through a validation process to authenticate their claims and once it is validated, the customers would be paid.

The revocation of the licences he said was not done to punish depositors but meant to protect their deposits, he added.

Mr. Otabil said the central bank through government has made available GHc900 million to pay depositors and we expect that depositors would receive 100 per cent of their deposits.

He explained to the host that the minimum, requirement for microfinance companies is GHc2 million.

The Governor of the BoG, Dr Ernest Addison, at the bank’s Monetary Policy Committee (MPC) news conference in Accra last week announced that the magnitude of the resources needed to embark on the entire reforms of the deposit-taking, non-bank sector was so large that it had to be approached in phases.

A similar exercise with the universal banks, which ended in December last year, cost the country almost GH¢11 billion, and it is feared that plans to replicate it for non-bank financial institutions (NBFIs) will prove costly for the country.

 

The main duties of the Receiver for the microfinance and microcredits are:

(i) To recover and maximise asset realisations for the benefit of Creditors including mainly Depositors and

(ii) Distribute realisations in accordance with the relevant provisions of Act 930, to satisfy the indebtedness of these institutions to their body of Creditors, to the extent possible.

The BoG said in a statement (published in full below) that:

“In order for the Receiver to determine the indebtedness of affected microfinance companies to their body of Creditors as well as the order of ranking of these Creditors for dividend distribution, as appropriate, it is the intention of the Receiver to put in place a Creditor Administration process with the following features:

“(i) Submission of Proof of Debt (“PoD”) forms-Creditors will be required to submit their claims by completing a PoD form to be designed by the Receiver. In filling these forms, Creditors will be required to attach relevant documentation supporting their claim(s) as well as amounts owed to them.

“(ii) Validating and agreeing claims:-the Receiver will independently verify and reconcile the claims submitted by Creditors to the records of the affected microfinance companies, to determine the validity and quantum of claim made by the Creditor.

“(iii) Payments to Depositors-with regard to the depositors of the affected microfinance companies, the Receiver will make payments to this class of Creditors using funds provided by Government for this purpose.

“(iv) Payments to other Creditors — For the class of other Creditors (excluding depositors), depending on the quantum and timing of asset realisations in the receivership of the affected microfinance companies, the Receiver will declare and pay dividends to this class of Creditors in accordance with the order of ranking of Creditors provided in the relevant sections of Act 930.”

 

 

 

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