Minimum capital for microfinance companies won’t be reduced-BoG

The Bank of Ghana (BoG) has rejected calls by the Ghana Association of Microfinance Companies (GAMC) for a downward review in the new minimum capital requirement of GHc2 million set for microfinance institutions.

[contextly_sidebar id=”n1gXCrBcBYf3ZxZEcgr1zASLDlhwCVgn”]Speaking on the maiden edition of Citi Fm’s consumer focused show,  Business Today, the national vice board chairman of GAMC, Ekow Boham said the 2million cedis was on the high side and called on the BoG to review downward the amount.

‘’Two million cedis is on the high side and we need to understand the industry we are playing in… But due to issues with most of the microfinance institutions in the country which resulted in most of them going down the regulator BOG also had to step in and first moved the requirement from 100,000 cedis to 500,000 cedis which was received with mixed reactions as some of the players thought it was good but others also in the industry said it was a bit on a high side.’’ He stated.

But the regulator of the industry which is the BOG says it will not reduce the amount.

Head of Other Financial Institutions Supervisory Department of the BoG, Raymond Amanfu told Citi Business News, the high risk nature of the operations of the MFI’s makes it difficult to review the capital requirement downwards.

He questioned why the BOG must review the requirement ‘’the cost of setting up institutions have gone up and the monies they are bringing is not for the central bank, it is for their own good so we won’t reduce it.’’

He says, several of the microfinance institutions have risks that are not proportional to their stated capital hence the central bank’s resolve to maintain the requirement.

‘’Some of them are even doing investments and fixed assets acquisitions that are higher than their equity so that is why we have raised the capital and we have given them a timeframe. ‘’  Raymond Amanfu stressed.

Per the new directive by the Bank of Ghana, all licensed tier 2 microfinance institutions are to raise their minimum paid-up capital to GH¢2,000,000 by 30th June 2018.

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By:  Lorrencia Nkrumah/citifmonline.com/Ghana