The Bank of Ghana (BoG) has directed rural and community banks (RCBs) and microfinance institutions (MFIs) to recapitalise to GHc1 million and Ghc2 million respectively by February 2020.

The directive was contained in a notice issued Monday, August 19, 2019

The February 2020 deadline for recapitalisation now replaces the earlier deadline of December 31, 2017, which elapsed with most of the institutions being unable to comply.

The earlier directive issued in 2015 had asked the institutions to stagger their capital raising.

Monday's notice, which was signed by BoG's Secretary, Mrs Frances Van-Hein Sackey, warned that RCBs and MFIs that fail to comply with the new deadline would be sanctioned in accordance with the Banks and Specialised Deposits-Taking Institutions Act (BSDI), 2016 (Act 930).

Consequently, it asked shareholders, directors and operators of RCBs and MFIs to take note and be guided.

The directive followed the completion of a far-reaching cleanup exercise which lasted a year and saw almost half a million institutions go under.

The final lap of the exercise was done on August 16, when 23 licences of savings and loans companies, finance houses and non-bank financial institutions were revoked and their assets and liabilities transferred to a receiver.

BoG revokes licences of 23 savings and loans companies 

The Bank of Ghana, BoG has revoked the licences of twenty-three (23) insolvent savings and loans companies and finance house companies.

The central bank in a statement said 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 had engaged with them in the hope that they would be recapitalized by their shareholders to return them to solvency.”

“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,” the statement added.

BoG in the statement explained that the 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 Bank of Ghana has also appointed Mr Eric Nipah as a Receiver for the specified institutions in line with section 123 (2) of Act 930.”

Some of the affected companies include: GN Savings and Loans Ltd, Ideal Finance Ltd, Unicredit Savings and Loans Ltd, Global Access Savings and Loans Company Ltd, Accent Financial Services Ltd, Midland Savings and Loans Company Ltd, First Allied Savings and Loans Co. Ltd