Licence of 386 financial institutions revoked

The Bank of Ghana (BoG) has revoked the licences of 192 insolvent microfinance companies.

The Central Bank has also revoked licences of another 155 insolvent microfinance companies that have ceased operations. 

In a press release Friday, BoG explained that actions were taken pursuant to section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930). 

This action requires the Central Bank to revoke the licence of a bank or Specialised Deposit-taking Institution (SDI) where the Bank of Ghana determines that the institution is insolvent or is likely to become insolvent within the next 60 days.

Consequently, the Bank of Ghana has appointed Eric Nipah as Receiver for the specified institutions in line with section 123 (2) of Act 930. 

Click here for the list.

In a related development, BoG has with effect from Friday revoked the licences of 29 insolvent microcredit companies.

The Bank of Ghana has also revoked the licences of 10 insolvent microcredit companies that have ceased operations.

According to the BoG, its action is pursuant to section 7 of the Non-Bank Financial Institutions Act, 2008 (Act 774), which mandates it to revoke the licence of a non-bank financial institution (NBFI) licensed. 

Under that Act if that institution among other things ceases to carry on business or ceases to satisfy a qualification under the Act or contravenes any provision of the Act or rules or directives issued by the Bank of Ghana.

The Bank of Ghana has also notified the Registrar of Companies at the Registrar General’s Department of the revocation of these licences and has requested that the Registrar commence winding-up proceedings against these companies.

A total of 70 microcredit companies were licensed by the Bank of Ghana from 2011 until the end of 2015 under Act 774, to provide microloans.

Severe undercapitalization, poor lending and risk management practices, and poor corporate governance practices were among many other reasons accounting for the poor performance and eventual collapse of the 39 failed institutions whose licences have been revoked.

Despite notices issued to the affected institutions by the Bank of Ghana over the last few years requiring remediation of identified regulatory violations and other supervisory concerns, these institutions failed to address the issues brought to their attention.

Following the revocation of the licences of these institutions, a total number of 31 microcredit companies will continue to operate. Going forward, the Bank of Ghana is strengthening its regulatory and supervisory framework, and promoting confidence in the microcredit sector. 

Click here to see the list.

 

 

 

 

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