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Remind borrowers you can sue to recover funds - BoG directs banks, others

BY: Maxwell Akalaare Adombila
Dr Ernest Addison, Governor, BoG
Dr Ernest Addison, Governor, BoG

The Bank of Ghana (BoG) has directed banks and other non-bank financial institutions (NBFIs) to always inform borrowers in clear terms that they could be sued to recover funds in the event of default.

The central bank said although lenders had the right to enforcement under the Borrowers and Lenders Act 2020, (Act 1052) and other applicable laws, some borrowers were unaware of same.

In a notice to the general public, BoG reminded the lenders and the borrowers alike that Act 1052 provided a regime for the rights and obligations of borrowers and lenders.

The notice was issued on April 14 and signed by the bank’s Secretary, Ms Sandra Thompson.


Essence

It said the directive to banks and other lenders to always remind their borrowers in clear terms of their right to sue was in line with the central bank’s mandate to promote and support the development of a fair, transparent, competitive and accessible credit market under Section 76 of Act 1052.

It said it was also meant to ensure improved disclosure during the lending process.


Specifics

BoG said in the notice that Section 59 to Section 75 enumerated the process for the repayment and recovery of debts.

Specifically, BoG said Section 61 of the Act 1052 set out the remedies available to a lender in the event of a default by a borrower.

It said the Act allowed a lender to sue the borrower on any covenant to perform under the credit agreement.

In a situation where a security interest was registered under Act 1052, BoG said a lender could realise the interest in the collateral without initiating proceedings in court.

It also said a lender could also appoint a Receiver or Manager to realise the security interest on behalf of the lender.


Directive

“In view of the above and in line with the mandate of BoG promote and support the development of a fair, transparent, competitive and accessible credit market under Section 76 of Act 1052, as well as to ensure improved disclosure during the lending process, BoG hereby directs as follows:

“Henceforth, all lenders are directed to expressly capture their rights of enforcement pursuant to Section 61 of Act 1052 in their credit and collateral agreements.”

“All lenders are advised to take note of the above and be guided accordingly,” the central bank said in the notice.