BoG to implement Deposit Protection Act in second quarter of 2017

The Bank of Ghana (BoG) has served notice that it will begin the implementation of the Ghana Depository Protection Act, 2016 (Act 931) in the second quarter of this year.

The Act which was passed by Parliament in 2016 is expected to protect depositors from unforeseen circumstances that may result in loss of funds.

“We may be aware there is a new Ghana Depository Protection Act, 2016 (Act 931), which were passed and gazetted for compliance by all licensed institutions of the central bank. We are finalising all the processes involved for the implementation to begin hopefully in the second quarter of this year,” the Chief Manager, Banking Supervision Department of BoG, Mr Ismail Adam, told the GRAPHIC BUSINESS after the launch of Goldenlink Savings and Loans in Accra.

The law follows a recent debacle that hit the microfinance sector resulting in customers of DKM Microfinance and God is Love Fun Club, among others losing millions of Ghana cedis.

According to the law, depositors whose monies get locked up in financial institutions during crisis may receive up to GH¢6,250 in compensation.

This will be paid by the Deposit Protection Fund Corporation.

Explaining some aspects of the legislation, Mr Adam stated that the new legislation would help the BoG to protect small depositors in the financial sector.

He opined that the law would protect anybody with a savings or current accounts who deposited money in the bank.

Implementing SDIs Act

Mr Adam also stated that the new Banks and Specialised Deposit-taking Institutions (SDIs) Act, (Act 930) was passed to ensure Specialised Deposit-taking Institutions conform to the stipulated period of submitting accurate returns.

“One of the main challenge is that most specialised deposit-taking institutions fails to submit their returns on time and when the returns are submitted they are sometimes prone to errors,” he said.

The BoG in 2009 adopted the International Financial Reporting Standards (IFRSs) for compliance by all public interest financial entities operating in the country.

However, the chief manager said this could not be extended to the specialised deposit-taking institutions sector due to some challenges faced at the time.

“With some of these issues now resolved the central bank has been putting structures in place to extend the implementation of SDIs and other related law such as the Ghana Depository Protection Act,” he added.

He also urged all savings and loans companies and other SDIs to start internal preparations towards the adoption of the accounting standards of the new laws by the end of 2018.

New entrance

Touching on the opening of the new financial institution, Goldenlink a subsidiary of the GLICO Group, Mr Adam said the central bank welcomed the new entrance Goldenlink Savings and Loans into the savings and loans industry.

“The company has operated successfully for several years as BoG licensed money inward remittance company prior its conversion to savings and loans outfit,” he said.

“As we welcome the new Goldenlink into the savings and loans sector there are high expectations that the company maintains the sterling performance it has exhibited as an inward remittance company and quickly increase its reach in the country,” he added.