Microfinance firms next on BoG's hit list

The Bank of Ghana (BoG) has served notice that it would soon liquidate all microfinance institutions (MFIs) that are insolvent following the sanitisation of the banking sector.

Governor of the BoG, Dr Ernest Addison, said on Monday, 24 September 2018 following a Monetary Policy Committee (MPC) meeting that the central bank is engaged in discussions with the Ministry of Finance, and soon a clear roadmap will be drafted for sanitising the microfinance sector.

“The measures for stabilising the segment of the financial sector is not different from the measures that have been taken with regard to the banks. If these savings and loans institutions are insolvent, they would have to be liquidated, that is the solution to insolvent financial institutions”, he stated.

In the banking sector, the BoG fused uniBank together with Sovereign Bank, The Royal Bank, The Beige Bank and The Construction Bank to form the Consolidated Bank Ghana Limited (CBG).

Also, UT Bank and Capital Bank were taken over by GCB Bank after they were found to be in dire straits.

In total, seven local banks have gone under, as the Bank of Ghana’s 31 December 2018 deadline for all universal banks to recapitalise from the GHS120 million to GHS400 million draws closer.

Directors and managers of these banks have been under probe by EOCO as it turns out that some of the institutions acted in ways that violated the rules and guidelines of the regulator.