Bank of Ghana to prosecute offending micro-finance institutions
The Bank of Ghana has threatened to close down and prosecute owners of micro-finance institutions (MFI) which are operating without licence from the bank.
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The bank is also collaborating with appropriate authorities to investigate micro- finance institutions which defraud unsuspecting customers.
The Director of Other Financial Institutions Supervision Department of the BOG, Mr Raymond Amanfo, said the bank constantly dialogued with operators in the industry on strategic and operational issues.
Panel session
Mr Amanfo made this known at the panel session on micro-finance as part of the Second University of Ghana Business School Conference on Business and Development in Accra on the theme: “Sustainability on Enterprise Development.”
He said the bank saw micro-finance institutions in Ghana as agents or catalysts for the realisation of the dreams of economic prosperity.
He gave the assurance that the bank would continue to provide a sound regulatory environment for the micro-finance sector.
“We also expect practitioners to engage in prudent activities, aimed at protecting customers, maximising profits and providing meaningful micro-finance services to the poor,” he added.
He said the bank would continue to engage the micro-finance institutions’ apex body on issues affecting the industry so as to find workable solutions to existing challenges.
Focus on core mandate
Mr Amanfo said the central bank was also helping the institutions to refocus on their primary and core mandate of providing efficient and effective financial services to the poor.
He said some of the challenges facing the micro-finance institutions were poor liquidity management skills due to inexperienced weak credit administration, policies and practices, the diversion of loanable funds into unprofitable and unsustainable projects, as well as the irregular submission of prudential returns to the BOG.
He said the central bank had issued final licences to a total of 447 micro-finance institutions, with the breakdown as 390 micro-finance companies, 50 money lending companies and seven financial non-governmental organisations.
At the end of May, this year, the total assets of these institutions stood at GH¢688.45 million, representing about 1.0 per cent of the total assets of the banking industry.
Loans and advances granted by the micro-finance institutions amounted to GH¢343.53 million during the same period.
“Total deposits mobilised during the period, on the other hand, totalled GH¢344.75 million with borrowings amounting to GH¢186.23 million,” he added.
The director said the bank had started receiving prudential returns from the licensed micro-finance companies while the bank was also embarking on on-site examination of some of those institutions. GNA