The Bank of Ghana (BoG) says it has observed with concern, a trend where some banks and Specialized Deposit-Taking Institutions (SDIs) impose certain fees and charges on customers.
According to the central bank, these practices are deemed to be unfair, inappropriate and detrimental to the financial inclusion agenda and the protection of customers’ interest.
In line with the mandate of the Bank of Ghana to deal with unlawful or improper practices of banks and SDIs under Section 3 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) and to ensure that the interest of customers of banks and SDIs are adequately protected, the Bank of Ghana has accordingly notified banks and Specialised Deposit-Taking Institutions of the abolition of some practices.
These include Credit Insurance Premium Overcharges.
As part of credit underwriting policies, a number of banks and SDIs require borrowers to hold credit insurance against eventualities such as death, permanent disability and termination of employment.
While the Bank of Ghana acknowledges the importance of this practice as a loss mitigating norm in credit management, a number of banks and SDIs take advantage, to overprice the premiums charged to customers, resulting in the increased cost of borrowing.
Banks and SDIs are directed to desist from premium overcharges and to adhere strictly to the following:
i. Banks and SDIs that opt to use their pre-determined insurance companies to underwrite borrowers’ loans, shall apply the same premium charged by the underwriting company to borrowers.
ii. Banks and SDIs are not permitted to retain insurance premiums collected from customers with the intention of implementing an internal insurance policy. This excludes commissions for Bancassurance arrangements.
Maintenance Fees on Savings Account
The application of “Account Maintenance Fees” by banks and SDIs on savings accounts inhibits deposit mobilisation and discourages the use of banking systems by the general public. Bank of Ghana has noted that the application of such fees has driven a number of savings accounts into debit and in so doing, eroded the deposits of vulnerable depositors who would generally expect their savings accounts to earn interest.
This practice is detrimental to financial inclusion and negates the gains of the financial literacy programmes geared towards promoting personal savings.
Banks and SDIs are directed to desist from charging “Account Maintenance Fees” on savings accounts. This ban however, does not include charges for services provided by banks and SDIs with the explicit prior subscription by customers.
By Laud Nartey|3news.com|Ghana