Microfinance Companies Confident BoG Will Extend Deadline For Minimum Capital
The Association of Microfinance Companies says it is confident the Bank of Ghana will extend the deadline for meeting the minimum capital requirement.
The Association is in talks with the central bank for an extension of the deadline for meeting the minimum capital requirement of GH¢2 million.
The deadline, which ended in June, has raised questions over whether defaulting microfinance institutions will be sanctioned but the Board
Chair of the Association of Microfinance Companies, Collins Amponsah-Mensah, tells JoyBusiness an extension is highly possible.
“We are engaging the bank of Ghana through the governor and we have had a lot of engagement. We believe we should be able to reach a consensus. What we proposed was for an extension of the deadline which just ended in June. We are very hopeful that at the end of the day, a win-win is what we expect,” he revealed.
The increase of the minimum capital requirement of GH¢2 million was met with stiff opposition from the microfinance sector.
They said the introduction of higher minimum capital requirements over the years has not been able to address the key challenges in the sector and it was only a suitable entry-point control into the sector.
According to Collins Amponsah-Mensah, talks are far advance with the regulator to consider a tier system in distributing the cost of the minimum capital requirement.
“We don’t believe that everybody will need GH¢2 million to do business. Some are doing business in rural zones and do not need so much to operate. We believe a tier system will best be needed,” he stated.
Meanwhile, the Head of Payment Systems Department at the Central Bank, Dr Settor Amediku says meeting the minimum prudential and regulatory requirement of the regulator will aid in the acquisition of a license to transact digital financial services.
“This is the minimum standard we require so they get bank approval to deliver digital services. If you want to even do agency banking you need to write to us. Failing to meet this requirement left the defaulting microfinance firm highly limited,” he revealed.
The Bank of Ghana is looking to raise the minimum capital requirement of the microfinance sub-sector.
The sub-sector is divided into four tiers. Tier 1 is made up of savings and loans companies and rural banks and they have a new minimum capital requirement of GH¢15 million and GH¢1 million respectively while tier 2 which is made up deposit-taking microfinance companies now have a capital requirement of GH¢2 million.