Nii Mante: Mr. Speaker, I rise to
present your Committee's Report:
The Borrowers and Lenders Bill, 2008 was presented and read the first time in the House on Friday, 17th October, 2008.
The Bill was subsequently referred to the Finance Committee for consideration and report in accordance with article 103 of the Constitution and order nos. 125 and 169 of the Standing Orders of the House.
The Committee met and considered the Bill with the Minister of State at the Ministry of Finance and Economic Planning, hon. Dr. Anthony Akoto Osei, officials from the Ministry of Finance and Economic Planning, Bank of ghana and the Attorney-general's Department and hereby presents this report pursuant to order no. 126 of the Standing Orders of the House.
2.0 Reference Documents
In considering the Borrowers and Lenders Bill, the Committee referred to the following documents, among others:
1. The 1992 Constitution of the Republic of ghana
2. The Credit Reporting Act, 2007 (Act 726)
3. The Bank of ghana Act, 2002 (Act
4. The Banking Act, 2004 (Act 673)
5. The Companies Act, 1963 (Act 179)
6. Standing Orders of the House.
Credit relationships between lenders and their customers are subject to a number of general laws. These include the Contracts Act, 1960 (Act 25), Mortgages Act, 1972 (NRCD 96), Home Mortgage Finance Act, 1993 (P.N.D.C.L 329), Hire Purchase Act, 1974 (NRCD 292), Chattels Transfer Act, 1952 (Act 51), the Companies Act, 1963 (Act 179) and the Finance Lease Act, 1993 (PNDCL 331), inter alia.
These laws provide generally for certain aspects of the rights and obligations of parties to a credit agreement.
This Bill builds on these pieces of legislation which apply to different aspects of the credit relationship in order to promote greater disclosure and consistent enforcement framework.
4.0 Object of the Bill
The object of the Bill is to provide an improved legal framework for credit, to improve standards of disclosure of information by borrowers and lenders, to prohibit certain credit practices, promote a consistent enforcement framework related to credit and to provide for related matters.
5.0 Contents of the Bill
The Bill contains a total of 38 clauses and a Schedule.
Clauses 1 to 5 deal with preliminary matters. The Bill applies to all credit agreements between parties who deal at arm's length. It however, does not apply to credit agreements that cover an amount
of less than one hundred ghana Cedis (gH¢100) or an amount to be determined by the Bank of ghana.
These clauses also provide the meaning of “credit agreement”, “credit facility”, “credit transaction” and “credit guarantee”.
Clauses 6 to 12 provide for the supervisory and enforcement role of the Bank of ghana. The Bank is empowered to promote and support the development of a fair, transparent and competitive credit market. The Bank is given the mandate to conduct investigations as it considers necessary where it has reason to suspect that a person has committed an offence under the Act or has been guilty of fraud or dishonesty.
Clauses 13 to 17 provide for borrowers' rights. These include the right to apply for credit, protection against discri-mination, the right to receive documents, and confidentiality of borrowers' personal records.
A person however, does not have the right to require a lender to enter into a credit agreement with that person.
A person aggrieved by the decision of a lender may make a complaint to the Bank of ghana for redress.
Clauses 18 to 19 deal with disclosure of information. There is a requirement for the pre-agreement disclosure of total cost of the credit. In soliciting for clients, a lender's written solicitation must disclose the name and business address of the lender, the lender's current annual interest rate and other costs of credit.
Clauses 20 to 31 deal with repayment and recovery of debt, collateral registry and registration of charges.
Clauses 32 to 35 cover enforcement of borrowers' obligations in the event
of default. Lenders are empowered to give the borrower a notice of default in writing and request the borrower to pay the amount within thirty days. A lender may enforce its rights against the borrower who fails to pay the outstanding amount or make satisfactory arrangement to do so after the receipt of the notice.
Clauses 36 to 38 contain miscellaneous provisions. These include annual reports, regulations and interpretation.
6.0 Observations of the Committee
The Committee observed that the Bill includes consumer protection mechanisms to ensure that borrowers are able to exercise their rights without being penalized or being made to suffer other detriments by the lender.
The Committee also noted that the Bill will improve the credit relationships between lenders and borrowers and encourage lenders to provide more credit to consumers.
It was further noted that the Bill empowers the Bank of ghana or its authorized agents to inspect the books, accounts, documents and transactions of a lender, borrower or employer. This is to ensure compliance with the provisions of the Act.
A person who has an interest in a charge is to register a certified copy of the charge with the Registrar of charges and collaterals within twenty-eight days after creation of the charge.
The Committee observed that this requirement for registration is in addition to the requirement under section 107 of the Companies Act, 1963 (Act 179).
7.0 Amendments Proposed
The Committee proposes the following amendments to the Bill:
i. Clause 1 -- amendment proposed -- subclause (1) (a), line 2, delete “and made within or has effect within the ountry”.
ii. Clause 1 -- amendment proposed -- on top of the headnote “Application” insert “Preliminary Matters”.
iii. Clause 1 -- amendment proposed -- subclause (2) (i), delete “organ of state” and insert “institution of state” wherever it appears in the Bill.
iv. Clause 1 -- amendment proposed -- subclause (2) (iii), delete “in terms of a legislation” and insert “by an enactment”.
v. Clause 1 -- amendment proposed -- Subclause (3), paragraphs (a) and (b), delete “Republic of ghana” in both paragraphs and insert “country”
vi. Clause 2 -- amendment proposed -- delete and insert the following:
“Meaning of credit agreement”.
2. For the purposes of this Act, a credit agreement is an agreement in the nature of a credit facility, a credit transaction, a credit guarantee or any combination of these in which the lender --
(a) resides or has its principal
office within or outside t h e country;
(b) is an institution of State;
(c) is an enti ty controlled by
an institution of State; or
( d ) i s a n e n t i t y c r e a t e d b y
v i i . C lause 3 -- amendment
proposed -- l ine 1, delete “provides” and insert “is”.
v i i i . Clause 3 -- amendment proposed -- paragraph (a), line 1, delete “pay” and insert “lend”.
i x . C l a u s e 4 - - amendment proposed -- p a r a g r a p h ( d ) , d e l e t e “leave” and insert “lease”.
x. Clause 5 -- amendment proposed -- line 1, after “credit” delete “agreement” and insert “guarantee”.
x i . C l a u s e 6 - - amendment proposed -- subclause (1)(a) line 2, delete “and industry”.
x i i . C l a u s e 6 - - a m e n d m e n t p r o p o s e d -- subclause (1)(f), delete “notices” and insert “orders”
x i i i . C l a u s e 6 - amendment proposed -- subclause (1)(h) line 1, between “report” and “annually” insert “to the Minister”.
xiv. Clause 9 -- amendment pro- posed -- subclause (4), delete “afford” and insert “give”.
x v . C l a u s e 1 0 - - amendment proposed -- subclause (1)(d), delete “count” and insert “court”.
x v i . C l a u s e 1 0 - - amendment p roposed - subclause (2)(b), line 1, delete “those” and insert “the”.
x v i i . C l a u s e 1 1 - - amendment proposed -- subclause (1), line 2, delete “of rights”.
x v i i i . C l a u s e 1 1 - - amendment p roposed - subclause (1) line 2, delete “has”.
x i x . C l a u s e 1 1 - - a m e n d m e n t p r o p o s e d - subclause (1)(a), at the beginning, insert “has”.
x x . C l a u s e 1 4 - - amendment p roposed - subclause (1), line 2, delete “sex, tribe” and insert “gender, ethnicity”.
x x i . C l a u s e 1 4 - - a m e n d m e n t p r o p o s e d -- subclause (1)(f), delete “applicable legislation” and insert “any legislation relating to credit”.
x x i i . C l a u s e 1 5 - - amendment proposed -- line 1, delete “shall” and insert “may”.
x x i i i . C l a u s e 1 5 - - amendment proposed -- paragraph (f), delete “of the borrowers choice” and insert “agreed between the lender and the borrower”.
x x i v . C l a u s e 1 7 - - amendment proposed -- at end, add “or by a court”.
x x v . C l a u s e 1 8 - - amendment proposed -- subclause (1) line 3, delete “first”.
x x v i . C l a u s e 1 8 - - amendment proposed -- subclause (2)(a), delete “debt” and insert “amount”.
x x v i i . C l a u s e 1 8 - - a m e n d m e n t p r o p o s e d -- subclause (2)(b), delete
[NII MANTE] “ d i s t r i b u t i o n ” a n d insert “disbursement schedule.”
x x v i i i . C l a u s e 1 8 - - amendment proposed -- subclause (2), add a new paragraph as follows
“ ( g ) t h e p r o p o s e d repayment schedule”
x x i x . C l a u s e 1 8 - - amendment proposed -- subclause (3), delete “commits an offence and” and at end, add “imposed by the Bank of ghana”.
x x x . C l a u s e 1 9 - - amendment proposed -- subclause (2), line 1, delete “in-person”.
x x x i . C l a u s e 2 0 - - amendment proposed -- headnote, delete “right t o s e t t l e a g r e e m e n t ” and insert “obligation”.
x x x i i . C l a u s e 2 1 - - amendment proposed -- line 1, delete “to”.
x x x i i i . C l a u s e 2 3 - - amendment proposed -- after “charges” insert “or collateral and perform other functions as determined by the Bank of ghana”.
x x x i v . C l a u s e 2 4 - - amendment proposed -- line 2, delete “or” and insert “and collateral”.
x x x v . C l a u s e 2 5 - - amendment proposed -- headnote, at end add “and collateral”.
x x x v i . C l a u s e 2 5 - - amendment proposed -- subclause (3), line 2, after “effect” delete “and” and insert “as”.
x x x v i i . C l a u s e 2 6 - - amendment proposed -- subclause (1) (f), delete “short”.
x x x v i i i . C l a u s e 3 0 - - amendment proposed -- subclause (2), line 2, delete “and” and insert “or”.
x x x i x . C l a u s e 3 3 - - amendment proposed -- paragraph (b), at end add “on notice to the person in possession of the property”.
x l . C l a u s e 3 4 - - amendment proposed -- last but three lines, delete “five thousand penalty units” and insert “five hundred penalty units” and in the last but one line, delete “five thousand” and insert “fifty”
x l i . C l a u s e 3 6 - - amendment proposed -- subclause (2) (a), delete “action” and insert “actions taken”
x l i i . C l a u s e 3 6 - - amendment proposed -- subclause (2) (c), delete “eff ic ient” and inser t “effective”.
x l i i i . C l a u s e 3 7 - - amendmen t p roposed -- delete and insert the following:
“The Minister may, in consultation with the Bank
[NII MANTE] of ghana, by Legislative Instrument, make regula- tions for the effective implementation of this Act”.
The Committee has carefully examined the Bill and finds that it will help to bring sanity to the relationship between borrowers and lenders who deal at arms length.
The Committee therefore, recommends to the House to adopt this report and pass the Borrowers and Lenders Bill, 2008 subject to the amendments proposed.
Respectfully submitted. Mr. Kenneth Dzirasah (NDC --
South Tongu): Mr. Speaker, I rise to support the motion and to indicate that inasmuch as this Bill is intended to improve human relationship with established financial institutions it is in the right direction.
But Mr. Speaker, many hon. Members
of the Committee have been worried over one particular provision which gives automatic right to lenders to foreclose or to take over properties that are used as security for the money lent without recourse to the courts. Mr. Speaker, this is a very crucial matter.
Experience abounds in the country where some other form of financial institutions confront their borrowers and in the process what they do is, whilst even in traffic these institutions are able to impound vehicles belonging to people who are perceived to be indebted to them and they leave such persons in grave difficulty.
Mr. Speaker, I think this is not a matter that we should encourage. There is enough protection under the law for the
banks and that at least, at the minimum, what we should expect this Bill to provide for should be that should there be any decision to foreclose any property the person who is likely to suffer must be given adequate notice.
Mr. Speaker, apart from this, I think the
Bill is in the right direction and I would like to support it.