BOG has revoked the operating licenses of some 347 microfinance companies

The Bank of Ghana has revoked the operating licenses of some 347 microfinance companies which it deemed insolvent or antediluvian.

The Executive Director of the Ghana Microfinance Institutions Network, Mr. Yaw Gyamfi had expressed his views on the relevance of the proposition by the Bank of Ghana to revoke operation licenses of some microfinance institutions during the 2019 edition of the Ghana Cooperative Credit Unions Chairpersons Conference early last Friday.

Mr. Gyamfi emphasized that the action was necessary to sanitize the micro finance sector and also reestablish the lost confidence of most Ghanaians in the Micro finance sector.

He was a speaker at the Conference on the topic; “Managing Through the Hard Times and Building Member Confidence” at the Credit Unions Training Centre at Kasoa in the Central Region.

The Bank of Ghana (BoG) later that Friday, revoked the licenses of 29 insolvent microcredit enterprises as well as 10 insolvent microcredit companies that have stopped operations.

BoG’s action is in line with section 7 of the Non-Bank Financial Institutions Act, 2008 (Act 774), which mandates it to revoke the licence of a non-bank financial institution (NBFI).

In a statement issued on Friday, 31 May 2019, the central bank said it has, “with effect from today, revoked the licenses of 192 insolvent microfinance companies”.

The statement added, that the “licences of another 155 insolvent microfinance companies that have ceased operations have been revoked”.

“These actions were 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 licence of a bank or Specialised Deposit-taking Institution (SDI) where the Bank of Ghana determines that the institution is insolvent or is likely to become insolvent within the next 60 days.

“Consequently, the Bank of Ghana has appointed Mr. Eric Nipah as Receiver for the specified institutions in line with section 123 (2) of Act 930.

“The revocation of the licences of these institutions is to get rid of insolvent and dormant institutions that have no reasonable prospects of rehabilitation and have denied depositors access to their deposits, thereby constituting a threat to the stability of the financial system”, the statement said.

By the revocation of these licences, “the Bank of Ghana seeks to protect the stability of the financial system and to protect affected depositors”.


The central bank said: “To salvage depositors’ funds, the government of Ghana has made funds available to enable the Receiver pay depositors, after their claims are validated”, adding that: “In line with the hierarchy of creditor claims set out under Act 930, other creditors of the failed institutions will be settled by the Receiver upon validation of their claims and to the extent that the Receiver is able to realize value from the remaining assets of these institutions”.

Background as presented by the BoG Following the revocation of the licences of these institutions, a total number of 137 microfinance companies will continue to operate.

Going forward, the Bank of Ghana has put in place measures to ensure that the existing institutions remain safe and sound by complying with relevant prudential norms.

Among other things, the Bank of Ghana is:

  • Undertaking a comprehensive review of licensing and supervisory policies and directives;
  • Reviewing the minimum capital requirements for microfinance companies and encouraging possible consolidation through voluntary mergers and acquisitions;
  • Introducing proportional corporate governance, fit and proper, and risk management directives;
  • Embarking on strict supervision of licensed institutions and enforcement of relevant regulatory requirements;
  • Increase the resources available for effective supervision of licensed microfinance companies.

The Executive Director of GHAMFIN expressed optimism that this step will strength existing micro finance institutions and overhaul the confidence of Ghanaians in microfinance institutions.

This he explained will strengthen micro finance institutions to take up its role as a reliable source of development for the Ghanaian micro economic sector.

Spread the love on your social media page