Bank of Ghana erred - GHASALC
The Ghana Association of Savings and Loans Companies (GHASALC) says the Bank of Ghana erred when it named the microfinance companies which lost their provisional licenses.
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The operations of microfinance companies have suffered series of scandals which have resulted in the revocation of some licences by the Bank of Ghana (BoG). This has heightened agitation from the public and impacted negatively on savings and loans companies, a different segment of the non-bank financial services sector.
“In an ideal situation, Bank of Ghana should have halted the operations of these financial institutions through the Ghana Association of Microfinance Companies (GAMC),” the President of the GHASALC, Dr Emmanuel Owusu, told the GRAPHIC BUSINESS on the sidelines of an advocacy campaign.
GHASALC is spearheading a campaign to advocate and identify savings and loans companies from microfinance companies in the country.
Dr Owusu said although the association was yet to compute the effect of the publication on business operations, members had started complaining about the high level of cash withdrawal after the names were published.
He said over the years, savings and loans companies had come to be associated with the microfinance sector given that they provided critical services to micro and small businesses.
“This situation has always created problems for all sector players but most especially, to the savings and loans companies due to some similarities in service provision perceived by clients of both sector categories and the general public as a whole,” he said.
He, therefore, called on the general public to clearly differentiate between savings and loans institutions and the microfinance companies rather than identifying the two entities as the same.
"The association is of the view that the lumping of savings and loans together with other microfinance providers was affecting the image and fortunes of their businesses given the reported cases of unethical practices by some of the microfinance providers," he said.
Financial sector
Ghana's financial services sector is classified into three categories, namely banking, non-banking and microfinance institutions.
The sector has, however, shown significant development over the past decade with increased number of providers and wide array of products and services.
Identifying savings and loans institutions
Presently, there are 58, non-banking financial institutions which are categorised into financial service providers, such as savings and loans companies, leasing companies, finance houses, mortgage companies, credit reference bureau and a number of government-sponsored development finance companies.
They provide services to both the formal and informal sectors.
The central bank regulates the operations of the non-banking financial service providers through the rules and guidelines for microfinance institutions under the Non-Banking Financial Institutions Act, 2008 (Act 774) and the Banking Act, 2004 (Act 673).