The Bank of Ghana (BoG) is embarking on a massive clean-up exercise in the banking industry aimed at preventing micro finance institutions from bolting with funds of depositors.
It has introduced new measures to safeguard deposits at these institutions.
For some months now, the banking industry has seen an increase in the number of microfinance firms folding up, with others running away with deposits.
A number of reasons including bad management practices, increasing non-performing loans, fraudulent activities and expansion without a commensurate increase in capacity have been attributed to the collapse microfinance companies.
The head of Supervision of other financial institution department at the Bank of Ghana, Raymond Amanfu told Citi Business News, they have intensified their documentation requirements.
“If we are going to renew your license, you will have to provide us with photographs of your key management staff because this idea of people just closing business, then we have the difficulty in knowing where they are” he said.
“So now if we have those pictures and photographs, we can publish then follow up.”
He however added that the security agencies are handling cases of the institutions which have already made away with deposites. funds.
“With the old ones, there are some of them with the securities. I believe they are carrying their own investigations and they will deal with them as the law demands,” Raymond Amanfu said.
According to him, “some are also planning to bring in new investors, but we have to make sure who these new investors are- as to whether they have the capacity to bring the capital to meet the depositors whose monies are locked up. It is very critical so we have to take our time to review these new investors who want to take over the troubled ones.”
By: Kwaku Anim Boadu/citifmonline.com/Ghana
Follow @boaduanim