Going by the predictions of a chartered economist, Mr. Emmanuel Amoah-Darkwa more banks will collapse before December this year just like the unfortunate seven – UT, Capital, Unibank, BEIGE, Sovereign, Construction, and Royal Bank who were either given to another bank or consolidated into a singular entity.
His comments can be hinged on the fact that a lot is happening in that sector. On a daily basis, Ghanaians are discussing on radio, while the new media has opened another door to discuss what bank customers, especially of the micro-finance and savings and loans varieties are going through to withdraw their deposits and use it for the purposes for which they saved it in the first place.
Public reports after the takeover of the last five banks have unintentionally sowed seeds of mistrust against them thereby digging a big chasm to the banks and every deposit-taking institution which by extension includes the savings and loans and finance houses. Thus there is a run on them.
This creates a very alarming situation and must be of concern to all citizens. This is because if the ugly picture being painted by the looming crisis is not checked now, it will lead to the collapse of the financial institutions involved.
However, citizens should understand that there is no bank in the world that would be able to pay depositors all their deposits when they all rush to it for their monies. That is what is happening to these small banks.
According to one of the savings and loans companies, their deposits are locked up with one of the consolidated banks and all attempts and pleas to the Bank of Ghana, BoG, to retrieve the money to settle their clients have gone unheeded. A group of aggrieved clients of one of the troubled banks even went to the extent of meeting one of the respected traditional rulers to intervene to retrieve their monies – this is how far the banking failure has brought us.
We at Goldstreet Business believe that whatever is happening in the sector is having its toll on the economy as a whole and it is time BoG, comes out to reassure all living in Ghana that there is nothing amiss.
What citizens will want to know is government’s action plan with timelines as to what it is doing to stabilize the micro finance houses, savings and loans companies and the rural banks to save them from collapse.
But the question that many are asking is why the long waits for things to deteriorate to this level before the regulators come in to salvage the already sinking ship; this is what Goldstreet Business will want to know.
However bad the situation might be, we believe it is not beyond redemption and that is the line BoG must toe. Resort to traditional economic theories that the situation will sort itself is not the attitude to display. Many have invested their lifetime resources into these financial institutions licensed by BoG itself. It is therefore her duty to police them and insist on them adhering to good corporate governance so stories of collapsing banks will not appear on the front pages of the media and trolling on social media.
This is the time that BoG must introduce the needed reforms especially the Deposit Insurance Scheme that will ensure that depositors do not suffer unduly for the actions and inactions of their fund managers.
Time is of essence to give the banking sector a facelift and propel it into the new age of doing business internationally.
