Volta Microfinance Saga Worries BoG

The Bank of Ghana (BoG) has expressed grave concern about reports on the activities of some illegal microfinance companies in the Volta Region which have succeeded in convincing customers to part with various amounts of money.

The microfinance institutions include Little Drops, Prosperity and Good Health Develop Winners, Royal Foundation Global Leads, Royal Care, Marceph Wealth, JODEQ Network Clear Image and Divine Rain.

A release issued on Friday in Accra by the bank's Communications Department, disclosed that the said microfinance institutions were neither licensed nor regulated by the BoG and therefore it had no control over their operations or interests payment promised to clients.

Caution
“Clearly, as unlicensed institutions engaging in deposit mobilisation or any other activity akin to banking, they were in breach of Section 4 of the Banking Act, 2004 (Act 673). The bank deems the activities of the aforementioned companies, as reported, as purely fraud disguised as some form of banking business”, it mentioned, adding that it was liaising with law enforcement agencies to trace and bring the perpetrators to book.

It said the aforementioned organisations adopted clandestine moves that made their activities known only to their clients who were perhaps lured by the high interest promised, adding that they have since ceased operations and now cannot be traced by those who knew where they were.”

Prompt
It said that as a collective responsibility to check the activities of such criminals, the general public should report any institution operating without licence to the BoG or Ghana Police.

It also asked the public to report licensed institutions that breach the laws and regulations governing the conduct of their business.

“This will assist the BoG, in partnership with security and law enforcement agencies, to take the appropriate and timely corrective actions to prevent further damage to the financial system.”

The public, in the meantime, has been asked to do business with only licensed institutions in the country by first inspecting their licences which must be displayed in their banking halls.

“When in doubt, members of the public have the right to confirm with the BoG the licence status of any company. As an indication, all licensed microfinance companies by the BoG would include the word 'microfinance' in their registered name.

“Deposits made at an unlicensed institution are at the risk of the depositor, and as such the government or BoG will not be responsible for such deposits.  Be cautious when dealing with companies offering abnormally high interest on deposit. Any savings interest rate, which is abnormally higher than Government Treasury Bill rates, should be a signal that the potential risk is high.”

By Samuel Boadi
[email protected]