BoG Stops 7 Companies For Operating Without Licences

Seven micro-finance companies in three regions have been closed down by the Bank of Ghana (BoG) for failing to meet licensing requirements, the acting Governor of the BoG, Dr Henry Kofi Wampah, has said. The companies have been directed by the Bank to refund all the money collected from their numerous customers stop operations forthwith. The financial entities are Unity Trust Micro-finance in Somanya, Multi Credit Micro-finance in Cape Coast, Busy Fingers at Nima and Mfa micro-finance at La, both in Accra. The others are Equip Susu Micro-finance and Divine Micro-finance, all in Kumasi, the Ashanti Regional capital. Dr Wampah told the Daily Graphic in an interview that the BoG had, earlier in 2011, given the micro-finance houses up to July 2012 to regularize their operations. By June this year, the finance houses had not secured operating licences from the BoG, to which they had been directed to refund depositors� money and cease operations, while reporting themselves to the regulator regularity, he said. Meanwhile, the BoG has cautioned the public to desist from dealing with micro-finance houses whose licences from the BoG are not boldly displayed in their offices. The Bank has categorized micro-finance houses into four tiers and each group is required to meet a certain minimum requirement. Those in the first tier, which comprises the normal savings and loans companies which mobilize saving and grant credit to public which required to meet a minimum capital of Ghc7 million to operate. Tier two refers to micro-finance companies which mobilize savings and grant credit to the public which require a minimum capital of Ghc100, 000 to operate, while tier three entities which do savings mobilization or money lending must have not less than Ghc60, 000 as minimum paid-up capital. Individual susu collectors who constitute the fourth tier only require to join an association in order to operate. Officials of the BoG believe that the micro-finance institutions (MFIs), with virtually no supervision. Speaking at the first annual general meeting of the Ghana Association of Micro-finance Companies (GAMC) in Kumasi earlier this year, the acting Head of the Banking Supervision department, BoG, Mr Franklin Belnye, catalogued some of the current challenges as inappropriate documentation, such as profiles of director and key management personnel, and financial projections submitted by the MFIs to the BoG. Others were the rush by MFIs to establish branches even before the first office was firmly grounded and the offering of unsustainable returns to customers in order to attract and retain them, he said. The rest are the inability of the MFIs to employ qualified persons to manage their operations and increasing their risk appetite without providing the requisite capital to support such operations. �In recent times, micro-finance companies are springing up by the day. However, the rate of growth in the sector has brought to the fore the urgent need to strengthen its regulation and supervision to streamline its operations,� he said.