BoG shuts down 347 microfinance companies

The Bank of Ghana has revoked the licences of 192 insolvent microfinance and microcredit companies.

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

In a statement issued today, 31 May 2019, the central bank said it has, “with effect from today, revoked the licences of 192 insolvent microfinance companies”.

“In addition”, the statement added, the “licences of another 155 insolvent microfinance companies that have ceased operations have been revoked”.

“These actions were taken pursuant to section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), which requires the Bank of Ghana 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 Mr. Eric Nipah as Receiver for the specified institutions in line with section 123 (2) of Act 930.

“The revocation of the licences of these institutions is to get rid of insolvent and dormant institutions that have no reasonable prospects of rehabilitation and have denied depositors access to their deposits, thereby constituting a threat to the stability of the financial system”, the statement said.

By the revocation of these licences, “the Bank of Ghana seeks to protect the stability of the financial system and to protect affected depositors”.

The central bank said: “To salvage depositors’ funds, the government of Ghana has made funds available to enable the Receiver pay depositors, after their claims are validated”, adding that: “In line with the hierarchy of creditor claims set out under Act 930, other creditors of the failed institutions will be settled by the Receiver upon validation of their claims and to the extent that the Receiver is able to realise value from the remaining assets of these institutions”.