The Bank of Ghana under the leadership of Dr Henry Kofi Wampah has begun what would be considered as appropriate. The decision by the central bank to revoke the licenses of over 50 micro-finance institutions by the end of September 2015 is timely.
This measure according to the Central Bank would ensure sanity in the micro-finance sector to encourage only legal ones capable of paying realistic interest rates to their customers to operate.
Coming from Raymond Amanfu, Head of Other Financial Institutions Supervision Department, BoG, members of the public who are concerned about activities of some micro finance companies would heave a sigh of relief. Many people fell that the central bank looked on unconcerned while many people were defrauded by some of the micro finance companies but some say the fraud victims must have themselves to blame for it. They were greedy as they fell for huge unrealistic interest rates as high as 50 to 70 per cent promised them.
While blaming the central bank for not taking action on the cheating financial institutions early enough we should also blame those who allowed themselves to be defrauded by these institutions. I wonder why they failed to learn from the activities of R 5 and pyram which were formed in the early 90s during which period they managed to rip off many people of their hard earned savings. These organizations were closed down by the central bank. Though the BoG is capable of sanitizing the situation many are those who feel that the action is late in coming. However since it is said that ‘it is better late than never’ Ghana would be better off when the central bank proceeds with the good work.
Although they are doing so already What the Bank of Ghana must intensify is to send people round to check on the status of the many non bank financial institution with the view to finding out whether they are properly registered. These organizations must be made to provide financial deposits in line with the law and in accordance with their status. All the 518 micro finance institutions must also be made to agree to insure their institutions against unforeseen financial problems in future. This is an important idea being bandied internationally for consideration of all nations. That needs be developed and enforced for the benefit of the financial institutions and their customers in ties of difficulties.
The order from the BoG asking all media houses to publish and air advertisements of only the recognized micro finance institutions is good. It is through the advertisements that many people especially market men and women fall to the quack financial institutions. The media houses should make sure the financial institutions seeking help from them are registered with the bank of Ghana to operate. Otherwise if the illegal institutions are caught in any shady deals the media houses helping them could be punished together with them. The steps taken by the BoG to deal with fraudulent activities of some micro finance organizations is good. However members of the public must seek advice from knowledgeable people in banking before subscribing to any financial institution
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