An Accra High Court has overturned a 2019 decision by the Bank of Ghana (BOG) to revoke the operating license of CDH Savings and Loans Company Limited.
A ruling issued on November 1, 2024, criticized the BoG’s approach, emphasising the constitutional requirement for fair and reasonable administrative actions.
The ruling referenced Article 23 of the Constitution, underscoring that administrative actions must uphold fairness.
The Court noted that the Central Bank’s two-week deadline for CDH to liquidate assets to address its liquidity challenges was “unreasonable and unfair”.
It has, therefore, ordered the bank and the company to negotiate a solution through arbitration.
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Background
Ghana’s Central Bank on Friday, August 16, 2019, revoked the licenses of 23 Savings and Loans companies, including CDH for being insolvent.
A report by the central bank on CDH Savings and Loans Ltd cited the company’s inability to sell repossessed collaterals which caused liquidity challenges, resulting in its inability to meet withdrawal requests from numerous depositors.
“The Bank of Ghana kept receiving complaints from individuals and institutions of their inability to access/withdraw funds from their accounts,” the report stated.
The report further stated that the company’s inability to access placements/investments with other insolvent financial institutions, including related companies, worsened its solvency liquidity situation.
In response, CDH’s shareholders, CDH Financial Holdings Limited, challenged the decision in court, seeking to have it quashed on grounds of procedural unfairness.
They also sought to prevent any further disruption to its operations until arbitration.