BoG gets thumbs up for acting on insolvent Savings & Loans companies

The Association of Savings and Loans Companies has backed an intended action by the Bank of Ghana to rid the system of insolvent operators.

The Association is confident the move will restore confidence and stabilize the financial sector.

“Whatever happens, there are certain effects such that it is going to make sure that financial institutions are better positioned to serve their customers which also has an effect on the institution. The other side has to do with those who will not be able to continue their operations, the regulator will also make sure that adequate measures are put in place to safeguard the depositor,” Executive Secretary of the Association of Savings and Loans Companies, Tweneboa Kodua Boakye said.

The Bank of Ghana is set to crack the whip on all insolvent operators of the thirty-seven Savings and Loans Companies through mergers or purchase and assumption processes.

It follows a similar exercise carried out in the banking sector to protect depositors’ funds.

Mr. Boakye says although the move will cause apprehension among customers, he believes it will ultimately sanitize and birth a stronger sector.

“Mind you that regulation first and foremost looks at the depositor. How do we protect that depositor to make sure that his or her money is safe? So we support the action of the regulator and we will want to encourage all customers to continue to use the services of these institutions who are regulated by the Central Bank because the regulator will make sure to do what is right,” he explained.

The exercise by the BoG is expected to cost 2 billion cedis to secure the funds of depositors.

The action will see BoG move beyond the banking space to other deposit taking institutions for the first time.

source: citinewsroom