BoG to seek more powers to deal with microfinance crisis

The Bank of Ghana is seeking more powers to effectively deal with the current crisis that has hit the microfinance sector.

The Bank of Ghana (BoG) last year suspended the operations of DKM Diamond Microfinance Company Limited for violating the Banking Act.

Also, the Financial Intelligence Centre (FIC) froze five accounts of the company, directing an immediate freeze of all debit transactions on any of the five accounts.

In addition, the bank last week revoked the licenses of some 70 microfinance companies and lending companies for failure to meet conditions precedent to the issuance of a final license.

In an interview with JOY Business, Outgoing Head of Other Financial Institutions at BoG, Raymond Amanfo said depositors funds will be better protected if the central bank is also empowered to take certain actions in the approval process.

He said microfinance companies are expected to have their affiliate companies. However, most of them don’t have, instead, they wait until they set up "the microfinance before they set up their affiliate companies."

To this end, he said the microfinance companies are going to sign an undertaking to "disclose their affiliate companies" and that failure to do so means that the Bank is as good as illegal.

Mr. Amanfo said he’ll send proposals to BoG management for them to review it and also seek legal opinion on how to enforce it.

He said within the first quarter of this year, “we should see some of these things.”

Mr Milison Narh, First Deputy Governor of Bank of Ghana, has also hinted that the bank is reviewing the entire process of licensing new microfinance institutions.

He said all regional and financial intelligence offices of the Bank are being resourced with staff to improve surveillance to intensify its intelligence network.

Mr Narh said collaboration with law enforcement agencies is also being improved to swiftly handle issues when they occur.