The Head of Other Financial Services at the Bank of Ghana, Mr. Kofi Amoah Awuah has disclosed on Nyankonton Mu Nsem on Rainbow Radio 87.5Fm that attempts were made to have some of the microfinance companies who had their licenses revoked merge but a few managed to that.
According to him, these affected companies were also asked to find new partners, restructure, inject new capital but majority of them could not achieve that.
He said it’s been difficult and the only way to resolve the crisis was to revoke their licenses because the affected companies were beyond repairs.
The Bank of Ghana has revoked the licences of 192 insolvent microfinance companies.
In addition, licenses of another 155 insolvent microfinance companies that have ceased operations (see attached list) have been revoked.
According to the Central Bank, ‘’the revocation of the licenses of these institutions is to get rid of insolvent and dormant institutions that have no reasonable prospects of rehabilitation and have denied depositors access to their deposits, thereby constituting a threat to the stability of the financial system. By the revocation of these licenses, the Bank of Ghana seeks to protect the stability of the financial system and to protect affected depositors.’’
Mr. Awuah said the situation was creating systemic breaks because of the inter dependency, inter-connectivity of the financial market. So there was the need to look at them in the way we have done, he said.
He stressed that the action was the best the BoG took.
On this same issue, the BoG released statement answering some questions on whether there was no other way to have solved the problem and in answering it said: ‘’Prior to the revocation of their licenses, the Bank of Ghana gave the owners/management of these institutions several opportunities as provided by law to take steps to rectify the identified regulatory violations and other supervisory concerns raised by the Bank of Ghana. The institutions whose licenses have been revoked, however, failed to take steps to address their insolvency and other relevant issues.
As mentioned above, a significant number of these institutions had already ceased operations and had locked up their offices, denying their customers of access to their funds in contravention of relevant laws. To ensure their orderly exit, and to protect the public and the financial system from further dealings with these institutions, the Bank of Ghana has revoked their licenses.’’