Gov’t rejects ¢740 million ‘invalid’ claims by customers of collapsed financial institutions

Government has rejected to pay some 740 million cedis being claims put forward by some customers of the non-banking financial institutions in the country whose licences were revoked over breaches and insolvency.

According to the Information Minister Kojo Oppong Nkrumah, the official receiver and liquidator of the institutions, Eric Nana Nipah, upon validation of the claims concluded they were illegitimate.

He explained the receiver rejected payment because the claims were largely invalid, noting they were “set offs and cross lending; that is, some depositors who have either taken loans from some of these same entities or had in their custody placements from some of these dissolved companies”.

In total, 6.4 billion cedis was received as claims from the customers of the 347 microfinance companies, 39 micro credit companies, 23 savings and loans and finance house companies which were collapsed.

Of the figure, Mr Oppong Nkrumah said the receiver accepted to pay only 5.66 billion cedis upon validation of all the claims received.

“Based on those validations, the receiver and official liquidator has commenced work on some 5.32 billion cedis leaving an amount of 340 million that is going through the very final processes of second level checks,” he indicated.

According to him, payments made to customers to date totals 5.06 billion cedis, noting that approximately 2.11 billion cedis was in cash and about 2.95 billion cedis in zero coupon rated bonds.

He said of the 297,000 individuals whose claims have been validated and accepted for payment, 98 per cent will be fully paid in cash.

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“The remaining two per cent individual depositor claims,” he said, will be paid by a combination of cash and bonds.

Meanwhile, he said there are some of the liquidated organisations whose books and records still have challenges, noting they are being processed for investigations.

Background

The Bank of Ghana in August last year revoked the licences of 347 microfinance companies, 39 micro credit companies, 23 savings and loans as well as finance house companies for being insolvent.

The revocation of the licences formed part of efforts by the central bank to restore confidence in the banking and specialized deposit-taking sectors.

BoG said the continued existence of these institutions posed risks to the interest of depositors.

A comprehensive assessment of the savings and loans and finance house sub-sectors carried out by the BoG identified serious challenges such as excessive risk-taking without the required risk management function to manage risk exposures, the use of depositors’ funds to finance personal or related-party projects or businesses and weak corporate governance structures.

Also the BoG held these institutions engaged in persistent regulatory breaches, involving non-compliance with Bank of Ghana’s prudential rules, and failure to implement BoG on-site examination recommendations.

“All efforts by the Bank of Ghana to get the shareholders and directors of the affected institutions to rectify the above lapses, especially the significant capital deficiencies, yielded no positive results,” BoG claimed.

This resulted in a continuous to deterioration of their financial position leading to their insolvency with some of them ceasing operations and closing their offices to depositors while those in operation at the time were unable to pay depositors and other creditors at all or fully.

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By 3news.com|Ghana