President of the National House of Chiefs, Togbe Afede XIV, is unhappy with the manner in which the Bank of Ghana (BoG) handled its recent cleanup of the Savings and Loans sector.

He believes the Central Bank could have handled its crackdown on the sector in a more helpful way than it did.

Speaking to Joy News’ Kojo Yankson at the British High Commission in Accra, the former Chairman of the National Investment Bank (NIB) said “I think that the approach could have been different – less destructive than we have today and should have been informed by a lot of scientific analysis."

“It is important that some of these things are approached with a little more patience so that you don’t create more problems than we are trying to solve,” he added.

Togbe Afede acknowledges the many issues the Savings and Loans sector is fraught with but said, the companies that operated genuinely, should have been given the opportunity to bounce back.

A complete closure, in his view, makes the Savings and Loans sector confused, leaving many of them to cave in when they must not.

“The kind of panic that we saw resulting from the way the process was handled, itself was not good. It could have been managed a little better so that the genuine ones who have done genuine lending could survive just by their debts being set off here and there.

“I think that a little more caution could have helped the process,” he stressed.

Background

The Bank of Ghana (BoG) on Friday, August 16, revoked the licences of 23 insolvent savings and loans companies and finance house companies.

According to a statement from BoG, “The revocation of the licences of these institutions has become necessary because they are insolvent even after a reasonable period within which the Bank of Ghana has engaged with them in the hope that they would be recapitalized by their shareholders to return them to solvency.”

The statement added, “It is the Bank of Ghana’s assessment that these institutions have no reasonable prospects of recovery, and that their continued existence poses severe risks to the stability of the financial system and to the interests of their depositors.”

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.”

The BoG also appointed Eric Nipah as a Receiver for the specified institutions in line with section 123 (2) of Act 930.