Money delayed Savings & Loans sector clean-up – Otuo Acheampong

Ernest Addison, governor of the Bank of Ghana.[/caption] A banking consultant, Nana Otuo Acheampong, has said the revocations of the licenses of 23 savings and loans companies by the Bank of Ghana (BoG) in an effort to clean-up the sector would have been done much earlier if government funds were available to do so. He said the BoG has had to adopt a piecemeal approach because of the commitment the government made to safeguard the deposits of customers. The Bank of Ghana on Friday announced the completion of the banking sector clean-up with the revocation of the licenses of GN Savings and Loans and 22 others. The BoG cites the 23 financial institutions as being insolvent and have long not met the grace period it gave them to recapitalise.

Even though the BoG is convinced the move will instill some confidence in the banking sector, some members of the public are skeptical, considering the panic that has characterized the process. Some experts including a senior lecturer at the University of Ghana Business School, Dr. Lord Mensah, are of the view that the clean-up could have been done wholesale. But Mr. Acheampong explained on TV3’s Saturday morning show, The Key Points, what informed the piecemeal approach the BoG adopted. “Ideally, it would have been best to do the whole five sectors at a go but for the fact that the government had promised that nobody loses a penny, we have to have money before you do it. “So first, money was earmarked to do the universal banks, so far about 13 billion [Cedis], next was almost 1 billion [Cedis] to resolve the micro finance,” he explained.
READ ALSO:  GRIDCo board confirms Ebenezer Essienyi as new CEO
‘Necessary evil’ He said the Governor of the BoG, Ernest Addison, had hinted at previous MPC meetings that they were looking for money to do a clean-up exercise in the savings and loans sector before it eventually asked  for GHȻ 7 billion for the exercise but was not too sure exactly how much it got. His assumption, however, is that since the exercise was carried out Friday because “some of the money has started coming in”. Mr. Acheampong maintained that the piecemeal approach, which he described as a top-down approach, was a “necessary evil”. “It would have been ideal for it to be done in whole but for the fact that the government promised to protect depositors’ funds,” he emphasized. Source:|Ghana]]>