Government will today commence payment of locked-up funds of depositors of Savings and Loans and Microfinance institutions.
President Nana Addo Dankwa Akufo-Addo who announced this indicated that customers of the failed financial institutions including DKM, which collapsed in 2015 will also receive their entire deposits once a validation exercise has concluded.
Delivering the message on the State-Of-the-Nation (SONA) last Thursday, the President disclosed that a total of GH¢5 billion is expected to be paid to these depositors in addition to GH¢13 billion that is being paid to customers of the failed banks.
“All depositors of savings and loans and microfinance institutions including DKM, which collapsed in 2015 will receive 100% of their deposits too once the validation exercise is concluded.
“I am informed that the Receiver of the Savings and Loans and Microfinance institutions will begin, on Monday, 24th February, making payments to their customers these monies, totalling five billion cedis, being in addition to the thirteen billion cedis being paid to the customers of the failed banks”, he added.
Seven banks namely, Capital, UT, BEIGE, Sovereign, Construction, UniBank and Royal Bank became insolvent due to poor management practices.
Assets and some Liabilities of UT and Capital Banks were later taken over by the state-owned GCB Bank whilst BEIGE, Sovereign, Construction, UniBank and Royal Bank were merged into Consolidated Bank of Ghana Limited.
In addition to these, over 300 savings and loans companies; and microfinance institutions collapsed due to bad management practices and therefore could not pay the deposits of their clients.
President Akufo-Addo pledged government will hold those responsible for these failures of the financial institutions accountable including their supervisors and managements and indicated the process has already started.
He urged those in charge of the supervision of the banks and other financial institutions to do their jobs honestly and completely to avert such meltdown in the future.
President Akufo-Addo however stressed the need for lessons to be learnt from the situation and to serve as a healthy caution to those who are offered unrealistic interest rates on deposits.
He warned it will not be possible to repeat such grand pay-up in another lifetime.
President Akufo-Addo indicated that the many corporate governance measures that have been put in place by Bank of Ghana offer assurances to mitigating such bank failures in future.
He averred that the banking sector clean-up has turned around Ghana’s weak banking sector that he inherited and that the sector is now well-capitalized, better managed, sound and liquid.
Banks, he said, are now increasing their lending to the private sector to help propel the transformation of the economy beyond aid.