BoG To Chase Illegal Microfinance Firms

The Bank of Ghana (BoG) is finalizing plans to clamp down on over hundred microfinance institutions across the country for operating without the requisite licence.

It follows the storm of financial distress that shook the industry in the last two years which saw several companies abscond with depositors’ funds.

The Central Bank is set to release the list of the illegal institutions by next week.

The Head of Banking Supervision in charge of Microfinance, Raymond Amanfo told the media that the process was initiated as far back as last year.

‘Late last year we conducted a country-wide exercise and we came close to 108 of these institutions outside Accra. If we have not given you licence and you are operating, it is illegal…we got about 125 and we realized that some are in the process of regularizing and so we have to take them out. So I’m sure by the close of next week you should see a list of over 100 illegal institutions, their locations and their regions and we’re going to warn the public to avoid doing business with them and we’re going to forward the list to the security agencies for them to take the necessary action,’ he said.

Mr. Amanfo also hinted of plans by the Central Bank to increase the minimum capital for new microfinance institutions.

Asked what might have necessitated this, he said, ‘You would agree with me that cost of doing business is gradually going up. We’re also talking about the institutions computerizing their operations -that is the cost of IT infrastructure involving the software and hardware. We’re also talking about the need for adequate remuneration to pay the staff for at least the next six months. And of course we also realize that the more capital you have…it acts as some sort of safety-net for the depositor. So definitely the current capital of GH¢500,000 would go up and we’re now working it out but I’m sure it won’t be anything less than GH¢1,000,000.’

– Myjoyonline

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