Savings & loans industry under capitalised — BoG

BY: Jessica Acheampong
Vice President, Dr Mahamudu Bawumia (2nd left), being assisted by Mr George Ofosuhene (2nd right),CEO of Bond Savings and Loans and Mr Peter Osei-Duah (right), Board Chairman to cut the anniversary cake. Picture: SAMUEL TEI ADANO
Vice President, Dr Mahamudu Bawumia (2nd left), being assisted by Mr George Ofosuhene (2nd right),CEO of Bond Savings and Loans and Mr Peter Osei-Duah (right), Board Chairman to cut the anniversary cake. Picture: SAMUEL TEI ADANO

Only eight out of the 37 companies operating in the savings and loans industry have paid up capital above the minimum amount of GH¢15 million, the Bank of Ghana (BoG) has said.

The quality of assets in the sub-sector has been called into question due to the high non-performing loans (NPLs).

Currently, the sector is recording high rate of NPLs, coupled with the fact that many of the companies are unable to meet the minimum 10 per cent capital adequacy ratio set by the regulator.

To help address this challenge, the BoG has hinted of plans to shore up the minimum capital requirement of companies operating help build a strong well-capitalised sector.

Although it is not readily known how much the new requirement will be, the increase has become necessary considering happenings in the sector.

The First Deputy Governor of the Bank of Ghana (BoG), Dr Maxwell Opoku-Afari, who gave the hint, said the move would help strengthen the liquidity and solvency of the institutions in the sub-sector and further enhance their viability.


“The Bank of Ghana in due course will come up with a plan to raise upwards the minimum capital of savings and loans companies and other categories of Specialised Deposit Taking Institutions in the country,” he said at the 10th anniversary launch of Bond Savings and Loans PLC in Accra.

Sector statistics

The savings and loans sub-sector is one of the fast growing sectors in the banking sectors. It currently comprises 37 companies with total assets of GH¢6.5 billion.

Dr Opoku-Afari said the savings and loans sub-sector dominated the Specialised Deposit Taking Institutions sector in Ghana, accounting for 42 per cent of the total asset size of the subsector.

As of the end of December 2017, the average capital adequacy ratio for the sub-sector was 8.6 per cent, which is below the statutory minimum of 10 per cent that is required.

Similarly, the savings and loans sub-sector also has very high NPLS, which he said called for corrective measures to improve the quality of assets in the sector.

“These challenges have ramifications on the sector’s ability to undertake and deploy effective financial inclusion. I would like to stress the need to improve the quality of credit administration, as well as underwriting standards,” he said.

Technology is key

The Chief Executive Officer of Bond Savings and Loans PLC, Mr George Ofosuhene, said the company greeted the dawn of electronic banking with excitement because it recognised the limitless opportunities it presented to expand its reach.

“In 2017, we changed our banking application software to BANKS, a robust world class system. This opened up the opportunity for us to introduce more innovative products and services to our customers with ease,” he said.

The company, again, runs its own ATM infrastructure, presenting customers with a faster and more secure transaction with every usage.

Mr Ofosuhene also gave a hint that the company had gone far with preparations to provide mastercard or visa feature for its customers.

“Earnest preparation towards providing this service is currently underway, and we look forward to making this a reality soon,” he added.

In a couple of weeks, Bond Savings and Loans is also to roll out, through the company’s e-banking platform, the ease of making bill payments, mobile money transfers and airtime top ups.

The CEO added that “bearing in mind that not every customer is a fan of the smartphone, we have taken the additional step of ensuring their banking convenience by providing service through the Unstructured Supplementary Service Data (USSD) system to cater for their transactional needs.”

Decade of operations

The company on June 27, 2018 launched its 10th anniversary to mark a decade of providing innovative and exceptional service in the financial services sector.

Bond Savings and Loans, which is licensed by the Bank of Ghana and authorised to mobilise deposits and give loans to the public, began operations as a finance house in 2008 and was able to acquire a Savings and Loans licence in its fifth year of operation.

“Our 10-year story is a story of the triumph of the human will, a celebration of Ghanaian brilliance and a commitment to a future driven by advanced technology and passionate service in the industry,” he said.