BoG is also poised to improve collaboration with law enforcement agencies to deal swiftly with illegal financial services providers.

Furthermore, BoG will, in collaboration with the media, intensify public education consistent with BoG/Government of Ghana (GoG) financial literacy objectives.


To that effect, all regional offices of the Central Bank are being resourced with staff.

Mr Millison Narh, Deputy Governor, BoG, made these known at a news conference on recent developments in the micro-finance sector in Accra on Friday.

In July 2011, Money Lenders, Susu Companies and Financial Non-Governmental Organizations (NGOs) that were then not under any form of supervision and regulation were brought under the regulatory ambit of BoG, in accordance with the powers of the Central Bank under the Bank of Ghana Act, 2002 (Act 612), the Non-Bank Financial Institutions Act, 2008 (Act 774) and the Banking Act, 2004 (Act 673) as amended.

Currently, there are 546 MFIs, comprising 468 Micro-Finance Companies, 67 Money Lending Companies and 11 Financial NGOs, while another 92 of them are awaiting the fulfillment of final approval requirements to begin operations.

Mr Narh said the Operating Rules and Guidelines for MFIs were first issued in July 2011 and subsequently reviewed, adding that the transitional period for which all existing MFIs came under the regulation of BoG expired in December 2011 and the MFIs were given a further period of six months to overcome the transitional challenges and fully comply with the requirements for approval to operate as MFIs.

He said the licensing procedures for MFIs involved two stages in accordance with sections 6 and 5 of Act 673, as amended, and Act 774, respectively, and the Operating Rules and Guidelines, Notice No. BG/GOV/SEC/2011/04 dated July 11, 2011 and Notice No. BG/GOV/SEC/2013/05 dated August, 30, 2013 for the establishment of microfinance institutions.

He explained that MFIs could not commence business unless they were issued with a Certificate to Commence Business by the Registrar of Companies.

Furthermore, Mr Narh said, where BoG was satisfied with the first stage of the applicant for a license, the applicant was issued with a Letter of Approval in Principle to fulfill certain conditions and complete the second part of the licensing process.

Accordingly, the Deputy Governor said, all MFIs, whose Letters of Approval in Principle had been revoked had, therefore, failed to comply with requirements for the issuance of a license to operate.

He urged the public to disabuse their minds of the misconception that the licenses some 70 MFIs had been revoked, adding that the affected MFIs had not been issued with a final approval and license to carry on the business of micro-finance in accordance with section 8 (1) of Act 673, as amended.

Mr Narh said all the affected MFIs had only been issued with Letters of Approval in Principle which had expired without completing the second part of the licensing process and that the revocation of Approval Letters followed the failure of the affected MFIs to respond to letters by BoG, the various associations and BoG Notice No. BG/GOV/SEC/2015/10 of July 15, 2015.

On DKM Diamond Microfinance Limited, he said the Central Bank had no option but to place a moratorium on its operations in order to protect depositors and the general banking system, as the Company had seriously flouted BoG’s prudential regulations.

He disclosed that the Central Bank had, through a High Court Order, requested the Financial Intelligence Centre (FIC), to freeze the accounts of DKM Diamond Microfinance Limited as an external auditor’s report had confirmed that the Company had violated sections 53 and 71 of Act 673, as amended, by not keeping accurate and reliable accounts of all transactions in its books and misreporting to BoG.

In addition, Mr Narh said, DKM Diamond Microfinance Limited was overexposed to its affiliates in violation of sections 43(1) and (2) of Act 673, as amended.

Furthermore, he said, DKM Diamond Microfinance Limited continued to pay unsustainable interest rates, was engaged in liquidity mismatches, violated Directives on Investment in Capital Expenditure, despite its low paid-up capital of GHc1.0million and diverted customer deposits into funding Public Private Enterprises in violation of BoG Notice No. BG/GOV/SEC/2013/05 which restricted capital expenditure to not more than 25 per cent of paid-up capital—with adverse consequences for meeting depositors’ withdrawals upon maturity.

He said DKM Diamond Microfinance Limited had also violated BoG Directives on Single Depositor Limits—Bank of Ghana Notice No. BG/GOV/SEC/2013/05 on Liquidity Requirements —which restricted the amount to be mobilized from a single depositor to not exceeding 5 per cent of the institution’s paid-up capital at all times.

Mr Narh said the Moratorium had, however, been lifted and all monies evacuated by BoG from the premises of DKM Diamond Microfinance Limited at the time of the Moratorium had since been handed back to the Company.

He made it clear that no MFI kept an account with the Central Bank and expressed regrets that while BoG was striving to sanitize the microfinance sector, another group of illegal financial services operators was emerging, hence the need to  take steps to improve surveillance of the microfinance landscape.

Source: ISD (G.D. Zaney)