Customers should not suffer for wrong investment decisions – BoG

A Deputy Director in charge of Banking Supervision at the Bank of Ghana (BoG), Eliot Amoako says depositors cannot be made to suffer over wrong investment decisions made by some financial institutions.

According to him, the Central Bank will not sit and watch unconcerned while business owners engage in practices which put depositors’ funds at risk.

Mr. Amoako’s comment comes on the back of the revocation of the licenses of some twenty-three savings and loans companies and financial houses by the Bank of Ghana.

GN Savings and Loans Company, one of the affected companies, is fighting the Central Bank over the revocation of its license saying the company remains very liquid.

Chief Executive Officer of the Company, Dr. Papa Kwesi Nduom says were government to pay his company monies due them, the company will have more than enough to meet its obligations to its customers.

But officials of the BoG disagree.

“Don’t mix that with government, because we are not government, we are to regulate the financial system. A financial system is supposed to protect its depositors who have voluntarily brought their monies to the financial institution and for months, for years… they are not getting their funds and it is on that basis that we have taken this decision and has nothing to do with the decision of the institution to do business with government. The decision of a government project was a risk it took and they were supposed to be balanced so that depositors do not suffer,” the Deputy Director in charge of Banking Supervision at the BoG said.

The Central Bank, Mr. Amoako reiterated took the decision to revoke the licenses of such financial institutions based on technicality.

“If it turns out to be true that government is owing them, and indeed government owes them and even government hasn’t paid…well, what I am saying is for us as a central bank, we are dealing with a financial institution and the financial institution is required to be solvent to meet depositors demands.

Let’s say you are a bank and you give your money to Mr. X and Mr. X does not pay you back and for that reason, depositors are suffering, depositors are queuing, depositors not getting their money is that the most prudent way to use their money? That is not an excuse to the depositor,” he remarked.

The BoG last Friday revoked the licenses of twenty-three (23) insolvent savings and loans companies and finance house companies.

According to the bank, the action was 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 license of a Bank or Specialised Deposit-Taking Institution (SDI) where the Bank of Ghana determines that the institution is insolvent.”

The Central Bank also appointed Mr. Eric Nipah as a Receiver for the specified institutions in line with section 123 (2) of Act 930.