BoG revokes licenses of 347 microfinance, 39 microcredit institutions

The Bank of Ghana (BoG) has revoked the licenses of 347 microfinance institutions in the country.

Thirty-Nine (39) microcredit institutions have also had their licenses revoked by the central bank.

Of the microfinance institutions affected, 192 of them were insolvent while the remaining 155 were insolvent and had ceased operations.

Following the revocation of the licences of these institutions, a total number of 137 microfinance companies remain active.

The BoG in a statement explained that these actions were to “protect the stability of the financial system and to protect affected depositors.”

“The revocation of the licenses of these institutions is to get rid of insolvent and dormant institutions that have no reasonable prospects of rehabilitation and have denied depositors access to their deposits, thereby constituting a threat to the stability of the financial system.”

The BoG took these actions in line with section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

This mandates the central bank revoke the licence of a bank or Specialised Deposit-taking Institution (SDI) “where the Bank of Ghana determines that the institution is insolvent or is likely to become insolvent within the next 60 days.”

The BoG has also appointed Eric Nipah as Receiver for the specified microfinance institutions, also in line with section 123 (2) of Act 930.

The government has made funds available to enable the receiver to pay depositors “after their claims are validated.”

“In line with the hierarchy of creditor claims set out under Act 930, other creditors of the failed institutions will be settled by the Receiver upon validation of their claims and to the extent that the Receiver is able to realise value from the remaining assets of these institutions.”

Source: Citinewroom