The Bank of Ghana (BoG) is marshaling all arsenal within its power to wage a vicious war on 10 unlicensed financial institutions and ‘millionaire’ fun clubs operating in the Eastern, Volta, Brong Ahafo, Northern, Upper East, and Upper West regions of the country.
These mushrooming unlicensed fun clubs and financial institutions are: God is Love Fun Club operating in Sunyani, Techiman, and Nkroranza; Perfect Edge Group operating in Sunyani, Perfect Business Fun Club in Sunyani; and L.P.M Eye Adom Fun Club in Sunyani, all in the Brong Ahafo Region.
Others are Financial Giants Fun Clubs operating in Sunyani, Bolgatanga, and Wa; Care for Humanity International operating in Sunyani, Techiman, and Wa; and Little Drops Helping Hand Association operating in Sunyani, Techiman, Brekum, and Ho, all in the Brong Ahafo, Upper East, Upper West, and Volta regions.
While Buoyant Investment Limited is operating in Techiman and Jirapa in the Brong Ahafo, and Upper West regions; and Great Winners Fun Club is also operating illegal in Kete Krachie, and Dambai in the Volta and Northern regions, according to BoG’s document available to African Eye News.com.
The above-mentioned illegal financial service providers and others continue to transact microfinance business without a licence from the Bank of Ghana contrary to Section 4 of the Banking Act, 2004 (Act 673) as amended.
“These unlicensed institutions attract their clients by offering very high and unsustainable interest rates but fold up within a short time due to their inability to meet depositors’ demands”, the document stated.
The Head of Other Financial Institutions Supervision Department of the BoG, Raymond Amanfu who is worried at the proliferation of the unlicensed institutions and fun clubs, maintained that these institutions charged unsustainable interest rates as high as 30 percent to 55 percent every two months.
“Such institutions collapse in no time and rather create the impression that the Bank of Ghana has placed moratorium on the operations (except DKM Diamond or Bank of Ghana/Financial Intelligence Centre is keeping theirs. As Such customers should come to the BoG for deposits”, he stressed at a press briefing attended by operators in the microfinance sector in Accra, over the weekend.
However, Mr Amanfu lamented that; “these cheats are well encouraged by some media houses who are carry wide publicity on unlicensed companies and their activities”.
In a bid to address the activities of the unlicensed institutions in the country, he disclosed that BoG was collaborating with the Financial Intelligence Centre, and security agencies to crack down, arrest and prosecute directors, shareholders and management of unlicensed institutions in the country.
Warning that; “we may have to include media houses that advertise these illegal institutions such as Fun Clubs and associations for abetment of crime”.
“Hence, the Bank of Ghana shall close any illegal institutions reported to be taking deposits with the support of the security agencies”.
Additionally, Mr Amanfu, disclosed that the Central Bank is setting up help desk at each of its regional offices across the country to help address quickly issues relating to the microfinance institutions (MFIs) especially the unlicensed ones, as one of the measures to stop the greed and thievery in the country’s microfinance sector.
We are also developing radio and TV jingles in English, Akan, and in other northern languages to sensitise the people on the operations of genuine MFIs and unlicensed ones, while plans are at foot to undertake massive education campaign to educate the people on the nefarious of the unlicensed financial institutions and fun clubs in urban and peri-urban areas of the country, according to the BoG.
On the astronomical interest rates being paid by the MFIs, Mr Amanfu indicated that though the BoG does not regulate interest rates, it would not allow the MFIs to pay unsustainable rates.
“We shall act promptly to deal with such situation”, he warned.
The BoG used the opportunity to caution all the commercial banks, Non-Bank Financial Institutions (NBFIs) and the general public that the Bank of Ghana is not responsible for the liabilities which arise from the activities of unlicensed financial institutions, fun clubs and associations.
“The public is therefore cautioned to desist from doing with such unlicensed institutions”.
African Eye News.com
