- Some Ghanaians have questioned the manner in which the Bank of Ghana (BoG) handled its recent cleanup of the Savings and Loans sector
- They believe the Central Bank could have handled its crackdown on the sector in a more helpful way than it did
- The BoG has appointed Eric Nipah as a Receiver for the specified institutions in line with section 123 (2) of Act 930
The Central Bank on Friday, August 16 revoked the licences of some 23 Savings and Loans companies in the country.
In a statement, the BoG 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 has engaged with them in the hope that they would be recapitalized by their shareholders to return them to solvency.”
Among the affected financial institutions are GN Savings and Loans, First Allied Savings and Loans, Global Access Savings and Loans and Midland Savings and Loans.
The revocation of the licences of the 23 Savings and Loans companies adds to woes of the financial sector in recent years.
The last two and half years have seen several banks, investment companies and microfinance companies closed down by the BoG.
However, perhaps, a bailout of these financial institutions would have been a better option than completely shutting them out.
Below are two reasons why a bailout would have also been a reasonable option:
1. Prevention of loss of jobs
So far thousands of employees with the collapsed Savings and Loans Companies have lost their jobs as a result of the crisis in the financial sector.
For a country already struggling with high unemployment rates, such a situation definitely doesn’t inspire confidence.
But had the Central bailed the affected institutions out, all these job losses would have been prevented.
2. Confidence boost in financial sector
It is true that by revoking the licences of the insolvent Savings and Loans companies, the BoG sought to prevent more depositors’ funds from locking.
But on the other hand, the Central Banks has further sunk confidence in the financial sector by taking such an action.
Having seen many financial institutions go down in recent years, it is normal for the public not to trust banks anymore and it will take time for confidence to build up again.
Meanwhile, YEN.com.gh earlier reported named 25 Savings and Loans companies and 11 finance houses that Ghanaians can save with.
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