Some major banks in Ghana have run out of liquidity, forcing them to resort to “deposit and win” promotions to raise cash in order to meet withdrawal demands of customers.

The situation, Business Day has gathered, is due to the surging activities of non-bank financial institutions in the country, which are rechanneling massive liquidity from the banks with promises of high returns on savings within a short period of time.

As Ghanaian bankers crack their brains on how to mobilise the vast financial wealth of the informal sector without exposing themselves to a sector regarded as extremely high risk, a new crop of young, finance-sawy entrepre­neurs operating in the non-bank financial sector seem to be making a go of it.

With a combination of innova­tive savings products and credit arrangements, non-bank financial institutions in Ghana are sprinting ahead of the still sluggish banks in tapping the vast wealth of the informal sector. It is no surprise that there has been a recent explo­sion of finance in the micro finance sector. The numbers speak for themselves.

Also, the rise in mobile money transfer by telecommunication companies have contributed heavily in shifting moneys, which hitherto would have passed through the banks, to the telcos.

The development, has resulted in some major banks intensifying promos on "deposit and win" raffles to urge their customers to deposit over GH₵100 every month for exorbitant prize reward.

Sources in the country’s major banks engaged in the raffle told Business Day that, the increasing rate of mobile money transfer and micro-finance activities are the major contributory factors to the decline in cash deposits at the banks.

“The banks in times like these must be innovative to attract cash deposit to meet daily withdrawals by customers, hence the promo­tional activities,” a source told Business Day.

Most of the banks engaged in the promo, which is under the supervision of the National Lottery Authority (NLA) on the Caritas Lottery platform, promise to re­ward participants with electronic items, cars, houses, and cash prizes, ranging from GH₵75.000 to GH₵100,000.

Prospective customers and existing ones, who participate in such raffles, are normally barred from withdrawing the amount deposited for a period of time to qualify.

Between the period of June and November 2014, eight banks, including SG-Ghana, Stanchart, ADB, Stanbic, Access Bank, Uni­bank, UT, and UMB, have all rolled out promos urging customers to deposit cash with the bank.

Stanchart, which launched its promotion recently under the tagline "Mega Rewards” promised its customers an exquisite three- bedroom house as the ultimate prize. The UMB, whose promo will end in December this year has promised existing and pro­spective customers an ultimate prize of GH₵100,000, while the second runner-up will receive a Hyundai ix35.

UT Bank, which has the lowest deposit of GH₵100 to qualify a cus­tomer has promised GH₵l00,000, GH₵30,000, and GH₵l0,000 as its first second and third prizes respectively.

SG-Ghana has already rewarded its numerous customers won the mini draws, presenting the ultimate prize of GH₵75,000 to the ultimate winner.

Views from banking

“Banks are embarking on promotions specifically their deposits in orde the liquidity or inadeq in circulation. This is c increase in the Bank o policy rate-the rate at lends to banks to 19 pe suiting from higher infl rapid depreciation of tl Cedi and the poor fiscal of the Ghanaian econc Johnson Mensah, a finar lyst with over 10 years’ ex in banking has said.

He continued: "This a leads to high lending interest rates on treasur ties- a situation whereby the of Ghana is enticing consumers to buy treasury bills in ordei up excess liquidity from circulation.”

 

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