The Ghana Association of Microfinance Companies (GAMC) says they fully back the action by the Bank of Ghana (BoG) to close down some 70 microfinance firms.
National Vice Chairman of GAMC, Ekow Orleans Boham, believes more checks needs to be done to rid the association of microfinance institutions not operating through the required means to transact such business in the country.
Speaking in an interview with NEAT FM’s morning show host, Akwasi Aboagye on “Ghana Montie”, he noted that the lives of many Ghanaians would be in danger if microfinance companies are left to operate without going through the proper mechanisms.
"individuals who have in their plans to do business or are already doing business with microfinance companies should ask them of their license which gives them the go-ahead to operate as a microfinance, especially with the susu collectors who move in the market, workplaces and homes claiming to help them grow their businesses," he advised.
He was commenting on the closure of some financial institutions by the service regulator; the Central Bank.
The Bank of Ghana (BoG), earlier this week, revoked licenses of seventy micro-finance and money lending companies in the country.
In a notice to the public, banks and non-bank financial institutions and signed by the Secretary, Mrs Caroline Otoo, the BoG said the action was influenced by the expiration of the provisional license that was given to the 70 companies to operate.
It explained that by the BoG rules, persons wanting to conduct Banking business or microfinance are often given a provisional license, to begin the processing of starting full operations.
However, they have up to six months to meet all requirements before they open their doors to the public.
The BoG said the 70 companies that were issued license in July 2015 have failed to meet all the requirements to be given the final approval to operate.
The Vice-President of GAMC cautioned individuals to be extremely careful when transacting business with such microfinances with lower interest rates than their parent banks.
He revealed that, the BoG in 2011, laid down specific rules and regulations for financial to operate within and also tasked the already operating non-financial institutions in the system to provide them (BoG) with relevant documents under which they operate to help curb this problem of operating with provisional license in the country.
“…out of these mechanisms put in place by the BoG, a microfinance is not supposed to start operating with a provisional license but it can only commence business when it receives its final license which gives it the appropriate mandate to operate," he disclosed.
Source: Elizabeth Semiheva/Peacefmonline.com/Ghana
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