The Bank of Ghana (BoG) has received GH¢900 million to undertake a clean-up of the troubled microfinance sub-sector of the financial services industry. The move is part of cleaning up the GH¢7 billion debt crisis that has hit a large sector of the deposit-taking, non-bank institutions, including savings and loans companies, in the country. The Governor of the BoG, Dr Ernest Addison, said at a Monetary Policy Committee (MPC) news conference in Accra on Monday that the magnitude of the resources needed to embark on the entire reforms of the deposit-taking, non-bank sector was so large that it had to be approached in phases. A similar exercise with the universal banks, which ended in December last year, cost the country almost GH¢11 billion, and it is feared that plans to replicate it for non-bank financial institutions (NBFIs) will prove costly for the country. “I am not sure we have the budgetary resources to undertake a clean-up of this magnitude,” Dr Addison said. “We simply don’t have GH¢7 billion to clean-up the entire non-bank, deposit-taking institutions and so we are tackling the microfinance sector, for which GH¢900 million has been provided,” he stated. The clean-up of the microfinance sector, which is expected to begin by the end of the third quarter of the year, will significantly trim down the number of microfinance companies in the country. Pleading for time Dr Addison, however, pleaded for time to come up with clear guidelines on the scope of the clean-up of the microfinance sector. “Give us a little space and we will communicate the fine details of our decisions later,” he said when pushed to provide timelines. About 705,396 depositors of distressed or collapsed microfinance companies and rural and community banks (RCBs) risk losing a total of GH¢740.5 million if their financial resources are not shored up swiftly. The amount represents deposits currently locked up in 272 RCBs and microfinance companies which are either in distress or had folded up as of last year, the governor said. In terms of significance, the deposits in distressed MFIs form 8.81 per cent and 52.49 per cent of total deposits of the RCBs and MFIs.