Over 95 percent of Savings & Loans, Microfinance customers paid fully – Governor Addison

Over 95 percent of Savings & Loans, Microfinance customers paid fully – Governor Addison

The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, has stated that all customers of the nine failed banks, and over 95 percent of customers of Specialised Deposit-taking Institutions (SDIs), which were affected by the banking sector clean-up have received their deposits.

According to Dr. Addison, the first phase of the banking sector clean-up involved the revocation of licenses of nine banks, for which all depositors were paid in full.

“The second phase has to do with the SDIs – these are the savings and loans, microfinance institutions and finance houses. In their case, for individual depositors who have been fully paid, the data that we have suggests that more than 95 percent of depositors have been fully paid,” he said.

The Governor continued, “So there are just about five percent depositors who have large amounts, these are the high net worth individuals who were settled with loans which were to be retired over five years. So, we think that most of it has been done.”

Dr. Addison made this known on Tuesday, 25th August 2020, when the President of the Republic, Nana Addo Dankwa Akufo-Addo, visited the BoG to familiarize himself with the operations of the Bank.

Touching on deposits of customers of GN Savings and Loans and First Allied Savings and Loans, the Bank of Ghana Governor noted that, over the last three weeks, all customers have been paid.

“The Government has provided a bond worth GH¢1.7 billion, for which we have monetized GH¢700 million. So, the receiver is also working at clearing the last few customers that are left in that segment. So, I think that we have made a lot of progress, Mr. President, with this depositor issue,” he added.

On helping to ensure the maintenance of a strong banking sector in the country, and to prevent the recurrence of a banking crisis, Governor Addison told President Akufo-Addo that the first step taken has been to pass the new corporate governance directive.

This, he said, had become necessary because, at the heart of the financial sector crises, was a breakdown in corporate governance in the various banks whose licenses were revoked.

“The second one has to do with misreporting of data, because of a lot of falsification of data by the financial institutions to the Central Bank. So we have brought in a new technology which will allow us to get the data directly from sources, so that no human interventions will be in there to distort the data that they send,” the Governor indicated.

The third step, he added, “has to do with the capital verification process, because a lot of the banks reported that they had capital when, in fact, they didn’t have any capital at all.”

He continued, “So we have reviewed the entire capital verification process of the bank, and it’s almost impossible now for us to have a bank that doesn’t have any capital, and yet it’s allowed to operate, and, of course, in addition to that, for all the staff of the banking solution department we have had a lot of training programmes with the IMF and other technical assistance have been provided.”

Dr Addison expressed appreciation of the country’s banking sector to President Akufo-Addo for the role he played in sanitizing the space, which has brought in its wake more confidence in its wake.

“ Your clear leadership and understanding of the role of the financial sector in the government’s transformation agenda, gave the leadership of the Bank the confidence and courage to embark on the comprehensive banking sector reforms over the last three years, which saw an increase in the minimum capital requirements, clean-up of the financial sector by the revocation of licenses of weak and insolvent institutions, and a revamp of the regulatory framework to stabilise and strengthen the sector,” he added.

The clean-up of the sector, he stressed, has resulted in a stable financial sector with fewer banks and Specialised Deposit-Taking Institutions (SDIs) that are well capitalised, liquid, and solvent, and better able to support our nation’s economic growth agenda.

“These efforts helped to earn the Bank international acclaim as the Central Bank of the Year in 2019. By the end of 2019, all the financial sector soundness indicators showed strong improvements as capital adequacy ratio, profitability, and liquidity levels increased significantly while non-performing loans declined,” he added.

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