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I hope the tax payer’s funds will not be the sacrificial lamb – Franklin Cudjoe on BOG license revocations

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President of IMANI Africa, Franklin Cudjoe has expressed worry about the impact the recent clean up in the banking sector may have on the economy and Ghanaians on the whole.

Though he acknowledges efforts by the Central Bank to clean the system and rid it of non-compliant institutions, he seeks to establish the fact that the actions may have grave consequences particularly on customers and employees of these institutions.

In a post on his Facebook wall on the back of the recent license revocation exercise by the Bank of Ghana, he wrote,

“I am a stickler for regulatory compliance and I can see the point Bank of Ghana wants to make. But are these the only financial institutions with tainted procedures?

Lives are at stake and the impacts are as gravely economic as they can be political. These are uncomfortable times and a contagion of morbid despondency is upon us as customers and employees of these institutions will fret and frustrate”.

Mr. Cudjoe further urged that the financial managers of Ghana put in the requisite measures to ensure the repercussions of their actions do not produce ‘tragic’ results and that the ‘tax payer funds” do not end up as the ‘sacrificial lamb’.

“I hope we are prepared. Good luck to the financial managers of Ghana and I hope again, that tax payer funds will not be the sacrificial lamb. The commons must not be tragic all the time”.

The Bank of Ghana Friday announced the revocation of the licenses of some 23 insolvent savings and loans companies and finance house companies.
The central bank in a statement on Friday said the revocation of the licences of these institutions has become necessary because they are insolvent even after a reasonable period within which the Bank of Ghana had engaged with them in the hope that they would be recapitalized by their shareholders to return them to solvency.”

“It is the Bank of Ghana’s assessment that these institutions have no reasonable prospects of recovery, and that their continued existence poses severe risks to the stability of the financial system and to the interests of their depositors,” the statement added.

BoG in the statement explained that the actions “were taken pursuant to Section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), which requires the Bank of Ghana to revoke the licence of a Bank or Specialised Deposit-Taking Institution (SDI) where the Bank of Ghana determines that the institution is insolvent. The Bank of Ghana has also appointed Mr Eric Nipah as a Receiver for the specified institutions in line with section 123 (2) of Act 930.”

The Central Bank however assured that funds are available to pay customers of the 23 finance houses and savings and loans companies whose licences were revoked.

According to BoG, it has provided funds to ensure that the Receiver of the financial entities, whose licences have been revoked, will pay the affected customers.

“The Government has made available funds to enable the Receiver to pay depositors of the savings and loans companies and finance houses after validation of their claims. Other creditors of the failed institutions will be settled by the Receiver in line with the hierarchy or priority of creditors’ claims set out under Act 930,” the Bank of Ghana said in a statement.