BoG to intervene in Savings & Loans sector

Regulator of Ghana’s financial economy, the Bank of Ghana (BoG), has hinted it will take intervening steps to address challenges confronting savings and loans companies that are in dire financial crisis. This disclosure was made by the Governor of the Central Bank, Dr. Ernest Addison during a meeting with journalists in Accra.

According to Dr. Addison, some savings and loans companies are facing challenges and the regulator is in talks with the Ministry of Finance on measures to stabilize the sector. He however noted that, the measures won’t be different from those that have been taken to stabilize the banking sector.

The Governor said, “there are a few savings and loans companies obviously that are having some difficulties, we are discussing with the Ministry of Finance on measures that need to taken to stabilize that segment of the financial sector.” He went on to say that, “if these savings and loans institutions are insolvent, they would have to be liquidated, that’s the solution for insolvent financial institutions.”

The Governor of was however cautious, saying, “now we have to be careful because the deposits of these savings and loans are not insured, so there has to be some cost associated with dealing with these insolvent savings and loans institutions with implications for the budget.” He also noted that, once conclusions are reached (between BoG and the Ministry of Finance), “the necessary things would be done.”

Recently, some savings and loans companies have been hit with panic withdrawals by their customers, a development that has been linked to the liquidation of five local banks, non refund of loans by clients, among others.

Meanwhile, the Association of Savings and Loans Companies not long ago, petitioned the Bank of Ghana to support some of their members said to be in financial distress. A move that the Association said would “prevent most of them from going down”, Executive Secretary of the Association, Tweneboah Kodua, mentioned.

By Francis Ntow