assistance of the law enforcement agencies to help arrest unlicensed companies. The Committee was assured that these measures are so far yielding positive results and that the Bank would continue to do more.
Furthermore, Bank of Ghana has established the Other Financial Institutions Institutions Supervision Department (OFISD) to oversee the operations of the MFCs.
BoG also indicated that from the information it now receives, it recently closed down three unlicensed micro finance entities operating in the country, namely Agro Development Fund Services Limited (ADF Services Ltd), Hebron Financial Investment Limited and Fast Loans Money Lending Limited.
ADF Services is in court challenging its closure. Hebron Financial Investment Services has filed a complaint with CHRAJ, challenging its closure and the Ghana Police is assisting to locate the directors of Fast Loans Money Lending Limited.
Establishment of a regulatory body
Given the importance of the sector and the growing numbers of the micro finance companies, the Bank has engaged some stakeholders to discuss further ways of improving the sector. One of the suggestions is to establish a regulatory body to oversee the sector.
The discussions are at their early stages and once they have been finalised, the Bill would be brought to the House for approval.
Sham microfinance companies
The Bank informed the Committee that it became aware of the operations of five companies, namely God Is Love Fan Club,
Jaster Motors Investment Limited, Little Drops Helping Hand Association, Perfect Edge Group and Care for Humanity International Fan Club in 2015.
The Bank said that they were unlicensed and operated illegally. As a result, they were reported to the Financial Intelligence Center (FIC) and their accounts were blocked.
The Bank indicated that FIC later requested that their accounts be de- frozen to enable them pay their customers. The directors of these entities have been arraigned before the courts and the cases are pending.
Measures to assist distressed MFCs
On how to assist MFCs from becoming distressed, the Bank said with the submission of weekly and monthly reports, it is the hope that it would help identify and prevent companies from becoming distressed. The Bank is also encouraging mergers to help protect weak companies.
Update on Diamond MicroFinance (DKM)
The Committee inquired about DKM and what caused the company to undergo liquidation.
The Bank, in its response, gave an update on DKM. It explained that DKM obtained a license on 25th October, 2013.
Following reports from the general public as well as its on-site and off-site inspection, including additional reports from the Regional Manager in Sunyani, it came to the fore that the company had committed some regulatory and supervisory breaches that threatened the safety of customer's funds.
It also triggered panic withdrawals from the banks and other deposit taking institutions in the country, especially Sunyani and its environs.
In view of the above, the Bank decided to take a number of actions against DKM. First, BoG requested the Financial Intelligence Center to freeze the accounts of DKM. The Bank also imposed a ninety- day moratorium on the operations of DKM and appointed Lobban Hyde and Partners to audit the books of DKM to ascertain its assets and liabilities.
After several opportunities given to the company to turn their operations around failed, the Bank revoked their license on 29th March, 2016.
At a special meeting held by BoG, a road map for liquidation of DKM was approved and the Registrar-General appointed an official liquidator. So far, 62,304 depositors have submitted 93,413 claims totally GH¢540,621,416.00 to the official liquidator. Currently, 58,140 depositors have been validated amounting to GH¢502,120,644.00.
The Committee enquired whether depositors of DKM have been paid. They explained that the liquidator is to realise the assets and pay off any outstanding liabilities. This process is ongoing and where some funds are available, depositors will be paid accordingly.
They indicated that due to the absence of the liquidator, it was difficult for them to give specific details of the liquidation process, even though some payments have been made.
After careful deliberations, the Committee is of the view that the Bank of Ghana has adequately put in place the
necessary measures to help sanitise the micro finance sector. The implementation of the Business Rules and the application of punitive sanctions have gone a long way to help weed out fraudulent companies in the sector.
However, a lot is still required as these unlicensed companies operate in the rural areas where detection is very difficult until the harm or a client reports. The Committee therefore urges the Bank of Ghana to strengthen its public education. The established call center should be adequately advertised so that people can call in and provide information.
The Committee also assures the House that, as the oversight Committee, it would continue to engage the Bank of Ghana to ensure that there is sanity in the sector.
In furtherance of this, the Committee recommends to the House to adopt its Report on the Statement made by Hon Charles Konadu-Yiadom on the socio- economic effects of sham microfinance companies in the Brong Ahafo Region.