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Receivers of collapsed banks recover GH¢731m debts

BY: Nana Konadu Agyeman
Dr Ernest Addison (left), Governor, Bank of Ghana, presenting the CEO of the Year Award (Agri Business) to Mr Amit Agrawal, CEO, Olam Ghana Limited in an awards ceremony that formed part of the summit. Picture: BENEDICT OBUOBI
Dr Ernest Addison (left), Governor, Bank of Ghana, presenting the CEO of the Year Award (Agri Business) to Mr Amit Agrawal, CEO, Olam Ghana Limited in an awards ceremony that formed part of the summit. Picture: BENEDICT OBUOBI

Receivers of the nine collapsed banks have been able to recover GH¢731 million out of the GH¢10.1 billion funds that were advanced to the customers of those banks, the Governor of the Bank of Ghana (BoG), Dr Ernest K. Y. Addison, has announced.

He said the funds were retrieved through loan repayments by customers, repayments of placements, sale of vehicles, liquidation of bonds and from other sources.

He explained that loan repayments by customers constituted about 72 per cent of the total proceeds realised.

“I am also reliably informed that the receivers have fully engaged the judicial system to assist in the recovery of certain assets and money from some of the shareholders, directors and other loan defaulters of these erstwhile institutions, with about 50 cases currently pending before the courts,” he added.

Summit

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Addressing the opening of the fourth Ghana CEOs Summit in Accra yesterday, Dr Addison blamed poor records and non-existent data for the challenge in recovering the loans.

The two-day event is being held on the theme: “The futuristic economy: Future of business and governance for economic transformation”.

It has brought together chief executive officers (CEOs) of both private and public corporate institutions to brainstorm on ways to leverage technology and develop a policy to push the country’s digitisation agenda.

It is also being used to honour various CEOs who have distinguished themselves in their fields of work, including manufacturing, banking, shipping, information and communications technology (ICT), entertainment, oil and gas and the pharmaceutical industry.

Challenges

Dr Addison said in the aftermath of the clean-up in the banking sector, the recovery of loans had not been without challenges.

For instance, he said, some individuals involved in loan defaults had resorted to the court system to frustrate the recovery process by engaging in frivolous actions, while poor documentation had also made it difficult for the receivers to identify and pursue some of the loan defaulters.

“Investigations so far have revealed that some of the assets were not registered in the names of the specific financial institutions but in the names of related or connected parties, making it difficult to dispose of the underlying collateral to offset the outstanding loans.

“Some of these loans were even fictitiously created and the directors are being pursued to recover such money,” he said.

High non-performing loans

With regard to non-performing loans (NPLs), Dr Addison said high NPLs were of serious concern that needed to be tackled with urgency.

He said as a regulator, the central bank had closely monitored the development in the industry and that in spite of the improvement made through the enforcement of the loan write-off policy, the NPL ratio remained high at 18.76 per cent as of the end of March 2019.

The governor said the high level of NPLs was unacceptable, since it had implications for effective monetary policy conduct.

He noted that lending rates would continue to remain high in the midst of high NPLs, with implications for how the private sector would respond to macroeconomic conditions in its quest to be innovative and support the economy.

Special courts

Dr Addison called on the Judicial Service to establish or designate special courts and judges to ensure the swift adjudication of matters arising out of the clean-up in the banking sector, particularly given the public interest and the enforcement of collateral agreements.

“Without an efficient judicial system that is prepared to deal with cases in a swift and decisive manner, all the work done in sanitising the banking system will not yield the desired results,” he said.

Technology

For his part, the Vice-President, Dr Mahamudu Bawumia, gave an assurance that by the end of this year, the country would be positioned to have an integrated database that would significantly ensure the efficient delivery of public services.

With such a system, he said, the drive to formalise the economy through leveraging technology would pave the way for public services and transactions to be conducted electronically.

He said that would also enhance financial inclusion and cashless transactions and improve administrative systems and governance.

“The use of technology will not only bring the government and the citizens together but also help offer efficient and reliable public services such as quick passport application and increase revenue from property rates, road tolls, taxes and other sources,” he said.