The Borrowers and Lenders Bill, which seeks to strengthen the regulatory framework of the financial sector, has been passed by parliament.
It moves to promote and deliver financial services within a modern financial system infrastructure, built around a common electronic platform for payments and settlements on real-time basis. It is also a critical component of the overall growth strategy.
The Bill, according to financial experts, will go a long way to ensuring high-level disclosure in creditor and borrower relations. It is also expected to give clarity to lending conditions and rights and obligations of lenders and borrowers, which include respect for contracts and the role of collateral.
It is further noted that the Bill would seek to reduce information asymmetry, adverse selection within the credit system, and improve the quality of asset portfolio while reducing the cost of lending and interest rate spreads.
The Borrowers and Lenders Bill was passed alongside the Non-Bank Financial Institutions Bill, which also seeks to provide a framework to promote effective prudential regulation and supervision of the wide range of non-bank financial institutions.
It is also expected to put all financial institutions on a level regulatory playing field; reduce the scope for regulatory arbitrage; and improve the efficiency of the credit system.
This will facilitate orderly functioning of microcredit institutions seeking to extend financial services to the non-bank segment of the population, according to a release authored by Esi Hammond Public Relations Officer of the Bank of Ghana.